Bill Gross administraba, para Pimco, el mayor fondo del mundo de bonos públicos (deuda del estado). Ahora practica la misma función para Allianz, otro gigante de fondos de inversión.

Latest letter from Bill Gross:

None dare call it a “currency war” because that would be counter to G-10/G-20 policy statements that stress cooperation as opposed to “every country for itself”, but an undeclared currency war is what the world is experiencing. Close to the same thing happened in the 1930’s, a period remarkably similar to what many countries’ policies resemble today….

…the United States that gained first mover advantage, lowering interest rates to near zero percent by the beginning of 2009, initiating quantitative easing (QE) policies far sooner than competitors, and in effect devaluing the dollar by 15% over the next several years…

…low interest rates globally destroy financial business models that are critical to the functioning of modern day economies. Pension funds and insurance companies are perhaps the most important examples of financial sectors that are threatened by low to negative interest rates.

…to elevate returns, investors and savers do all the wrong things required of a stable capitalistic model. Savers save more, not less, and invest at higher risk levels…

Asset prices for stocks, high yield bonds and other supposed 5-10% returning investments, become stretched and bubble sensitive; Debt accumulates instead of being paid off…

The financial system has become increasingly vulnerable only six years after its last collapse in 2009….

Stephen S. Roach

Stephen S. Roach, former Chairman of Morgan Stanley Asia and the firm’s chief economist, is a senior fellow at Yale University’s Jackson Institute of Global Affairs and a senior lecturer at Yale’s School of Management. He is the author of the new book Unbalanced: The Codependency of America.

JAN 26, 2015 20

The Lemmings of QE

NEW HAVEN – Predictably, the European Central Bank has joined the world’s other major monetary authorities in the greatest experiment in the history of central banking. By now, the pattern is all too familiar. First, central banks take the conventional policy rate down to the dreaded “zero bound.” Facing continued economic weakness, but having run out of conventional tools, they then embrace the unconventional approach of quantitative easing (QE).

The theory behind this strategy is simple: Unable to cut the price of credit further, central banks shift their focus to expanding its quantity. The implicit argument is that this move from price to quantity adjustments is the functional equivalent of additional monetary-policy easing. Thus, even at the zero bound of nominal interest rates, it is argued, central banks still have weapons in their arsenal.

But are those weapons up to the task? For the ECB and the Bank of Japan (BOJ), both of which are facing formidable downside risks to their economies and aggregate price levels, this is hardly an idle question. For the United States, where the ultimate consequences of QE remain to be seen, the answer is just as consequential.

QE’s impact hinges on the “three Ts” of monetary policy: transmission (the channels by which monetary policy affects the real economy); traction (the responsiveness of economies to policy actions); and time consistency (the unwavering credibility of the authorities’ promise to reach specified targets like full employment and price stability). Notwithstanding financial markets’ celebration of QE, not to mention the US Federal Reserve’s hearty self-congratulation, an analysis based on the three Ts should give the ECB pause.

In terms of transmission, the Fed has focused on the so-called wealth effect. First, the balance-sheet expansion of some $3.6 trillion since late 2008 – which far exceeded the $2.5 trillion in nominal GDP growth over the QE period – boosted asset markets. It was assumed that the improvement in investors’ portfolio performance – reflected in a more than threefold rise in the S&P 500 from its crisis-induced low in March 2009 – would spur a burst of spending by increasingly wealthy consumers. The BOJ has used a similar justification for its own policy of quantitative and qualitative easing (QQE).

The ECB, however, will have a harder time making the case for wealth effects, largely because equity ownership by individuals (either direct or through their pension accounts) is far lower in Europe than in the US or Japan. For Europe, monetary policy seems more likely to be transmitted through banks, as well as through the currency channel, as a weaker euro – it has fallen some 15% against the dollar over the last year – boosts exports.

The real sticking point for QE relates to traction. The US, where consumption accounts for the bulk of the shortfall in the post-crisis recovery, is a case in point. In an environment of excess debt and inadequate savings, wealth effects have done very little to ameliorate the balance-sheet recession that clobbered US households when the property and credit bubbles burst. Indeed, annualized real consumption growth has averaged just 1.3% since early 2008. With the current recovery in real GDP on a trajectory of 2.3% annual growth – two percentage points below the norm of past cycles – it is tough to justify the widespread praise of QE.

Japan’s massive QQE campaign has faced similar traction problems. After expanding its balance sheet to nearly 60% of GDP – double the size of the Fed’s – the BOJ is finding that its campaign to end deflation is increasingly ineffective. Japan has lapsed back into recession, and the BOJ has just cut the inflation target for this year from 1.7% to 1%.

Finally, QE also disappoints in terms of time consistency. The Fed has long qualified its post-QE normalization strategy with a host of data-dependent conditions pertaining to the state of the economy and/or inflation risks. Moreover, it is now relying on ambiguous adjectives to provide guidance to financial markets, having recently shifted from stating that it would maintain low rates for a “considerable” time to pledging to be “patient” in determining when to raise rates.

But it is the Swiss National Bank, which printed money to prevent excessive appreciation after pegging its currency to the euro in 2011, that has thrust the sharpest dagger into QE’s heart. By unexpectedly abandoning the euro peg on January 15 – just a month after reiterating a commitment to it – the once-disciplined SNB has run roughshod over the credibility requirements of time consistency.

With the SNB’s assets amounting to nearly 90% of Switzerland’s GDP, the reversal raises serious questions about both the limits and repercussions of open-ended QE. And it serves as a chilling reminder of the fundamental fragility of promises like that of ECB President Mario Draghi to do “whatever it takes” to save the euro.

In the QE era, monetary policy has lost any semblance of discipline and coherence. As Draghi attempts to deliver on his nearly two-and-a-half-year-old commitment, the limits of his promise – like comparable assurances by the Fed and the BOJ – could become glaringly apparent. Like lemmings (roedores/ratas/pestilencia) at the cliff’s edge, central banks seem steeped in denial of the risks they face.

http://www.project-syndicate.org/commentary/ecb-quantitative-easing-experiment-by-stephen-s–roach-2015-01

Gold has had a solid January – up close to 10% as measured by the SPDR Gold Shares ETF (GLD). It’s not unlikely territory for the yellow metal. 2014 started out in much the same way, up more than six percent that month before closing the year a few percentage points lower than where it began.

Peter Schiff thinks while the start of 2015 is similar, the end will be quite different.

“All the Wall Street strategists are all bearish on gold. They’re bearish on gold stocks and I think instead of giving up the early rallies that happened last year, I think we’re going to build on the gains throughout the year.”

He notes that the price of gold I s up in every currency but the dollar this year, though he’s not completely ready to discount the precious metals in dollar terms.

“I think gold is going to go up in all currencies – it is rising faster in Euros and some other currencies than it is in dollars but it’s still rising in U.S. dollars…I think it’s breaking out – now is a good time to buy….In fact this year I believe gold prices are going to hit all time record highs in just about every major currency except the U.S. Dollar.

We might have to wait until 2016 before gold prices hit a record high in dollars.”

Schiff believes the strong dollar has no where to go but down, another catalyst for gold as the year plays out. Still, he says the biggest move in gold in dollars will come at the hands of the Fed.

“When the Fed announces QE 4, that’s going to be a big game changer. It’s going to catch everybody by surprise.” Schiff says such a move by the Fed would prompt China to follow in Switzerland’s footsteps, depeg-ging the Yuan from the dollar as the Swiss did from the euro two weeks ago.

He also notes that gold and the Swiss franc have a history of mutual benefits. He believes a strong Swiss franc, un-pegged from the euro, will also aid in gold’s ascent.

http://finance.yahoo.com/news/peter-schiff–qe-4-will-send-gold-toward-new-highs-193301148.html

Related: Schiff: QE won’t work in Europe just like it didn’t work here

Re: Titular del Wall Street Journal: “Leftist Economist Yanis Varoufakis Named Finance Minister”

This Greek tragedy just keeps getting more and more entertaining. With the 2 chief members of the Greek finance team being in one case a member of the Communist Party and in the other, an “avowed libertarian Marxist”, it should be really amusing to watch the drama unfold on the negotiating stage from up in the amphitheater.

Quote from the newly elected party leader in Greece:
“The verdict of the Greek people ends, beyond any doubt, the vicious circle of austerity in our country.”
The “vicious circle of austerity”. Just think about that for a couple minutes if you were wondering how crazy the world has become. How long do we think the Germans accept this sort of thing before they finally say enough?
“Market complacency on Greece is a mistake. Not because Greece itself is a huge systemic threat, but because the same political dynamics in Greece are coming soon to Italy. Greece is Bear Stearns. Italy is Lehman.”

Plausible Greek scenario by David Zervos, a Greek American and follows Greece closely:
” honestly think this has a 75% chance going down the messy path for Greece. Remember, when it comes to the loan decisions Germany can veto. This is not like the ECB where a majority rules. Tsipras will threaten non-payment. The Germans will say go ahead and try. The Greek banks will see sharp outflows. The Greek central bank will tap the ELA [Emergency liquidity assistance] asking it from 50b up to 60b/70b fast. The Germans will claim the Greek banks are insolvent and the ELA needs to be shut. The Greeks will say their banks just passed stress tests and this is a liquidity crisis not a solvency crisis. The ELA will be tapped again for another 10b/20b. Then the rubber will then hit the road….

The Germans would like nothing more than to show Italy and Spain what happens when you don’t follow the fiscal rules. …The sad truth is that if Merkel can get Greece out without taking the blame she will go for it. ”

Maybe a Greek exit will be a catalyst for a big gold rally.

¿Tienes Oro?

JP Morgan report on Novavax

Cory Kasimov

North America Equity Research
5 January 2015
Novavax – NVAX (OW, $7 PT)

2015 is shaping up as a news rich year with several key data readouts and the potential initiation of pivotal programs.

What happened in 2014: In 2014, NVAX shares rose 10% vs. the NBI +30% and +13% for the S&P. NVAX initiated four clinical trials in 2H14, setting the stage for an important 2015 with several data readouts expected.
2015 Outlook & Thesis: We are optimistic about the potential of NVAX’s proprietary recombinant nanoparticle vaccine technology (VLP) and believe the platform has been validated by clinical data from several programs (RSV and H5N1/H7N9 flu). NVAX is the leader in developing a vaccine to protect against infection from respiratory syncytial virus (RSV), the leading cause of acute respiratory infections in infants/children and what we view as the last major infectious pediatric disease without preventive therapy. Based on safety and immunogenicity data, we see a high probability of success for the RSV program and believe clinical data around mid- 2015 could drive meaningful upside in shares.

More specifically, NVAX initiated three clinical trials in 2014 for its RSVF protein vaccine program: 1) a Ph2 trial in pregnant women in their 3rd trimester began in 2H14 with safety/ immunogenicity data of mother & child expected in late 3Q15, 2) a Ph1 trial in pediatrics began in 2H14 with safety/ immunogenicity data expected in 3Q15, 3) a relatively large Ph2 trial in elderly pts (1,600 pts) began in 2H14 with safety/ immunogenicity/efficacy signal data anticipated in 3Q15 (importantly, this Ph2 data could define the design of the Ph3 trial, which could begin as early as YE15 in the N. hemisphere or in 1Q16 in the S. hemisphere). On NVAX’s quadrivalent seasonal influenza vaccine program, safety/ immunogenicity Ph2 data is expected towards the end of 1Q15. Additionally, NVAX plans to initiate a Ph1 trial in 1Q15 with safety/ immunogenicity data expected in 2Q15for its combo RSV/influenza product. The co plans to begin a Ph1 trial in 1Q15 for its ebola GP vaccine with matrix-M, with data expected in 2Q15.

Key 2015 Catalysts: We expect important clinical data readouts throughout 2015, incl Ph2 data for the RSV vaccine for maternal immunization and the elderly, and Ph1 data for the RSV vaccine in pediatrics in 3Q15. Ph2 data for the quadrivalent seasonal influenza vaccine is expected in 1Q15, and Ph1 data for a RSV+flu combination vaccine and an ebola vaccine are expected in 2Q15. Importantly, Ph3 studies for the RSV vaccine for maternal immunization and the elderly could potentially begin in late 2015.

Balance Sheet: NVAX ended 3Q with $190M in cash and no debt. Given this cash position and with BARDA funding NVAX’s influenza programs, we estimate the company has sufficient cash to fund programs into 2016.
Valuation and Key Risks: Our (finales del 2015) YE15 price target of $7 per share is based on a blended average of our proprietary probability-adjusted scenario analysis (50%) and a risk-adjusted NPV model (50%). Risks to our thesis/price target include clinical setbacks (particularly for the RSV program) and competition from other companies looking to develop an RSV vaccine.
The Global Vaccine Market is exploding…

From the WHO (Organización Mundial de Salud) website
“The vaccine market accounts for a relatively small share (2-3%) of the global pharmaceutical market sales. However, there has been rapid growth over recent years, with the vaccine market QUADRUPLING in value from USD 5 billion in 2000 to almost USD 24 billion in 2013, according to various sources. WHO growth estimations indicate the market may increase in value to almost 100 billion by 2025, with the arrival of new preventive, therapeutic and adult vaccines. In 2012, according to vaccine manufacturers, vaccines were in pipeline development for at least 31 infectious diseases. However, not all of these vaccines will make it to market. (IFPMA 2012:Delivering the promise of the Decade of Vaccines)

“In addition to the arrival of new vaccines on the market, four factors account for growth in value:

Higher prices for new vaccines in middle-income and developed countries;
Greater demand from developing countries;
Global eradication and elimination efforts for some diseases (polio, measles rubella, etc.);
The addition of adolescent and adult markets to the pediatric market.

The production of vaccines is becoming a profitable and promising niche for the pharmaceutical industry that is particularly attractive for innovative and research based companies.”

According to the New Yorker, the vaccine business is growing faster than the drug business….