EDITOR: | January 27th, 2013

Dr. Doom “less pessimistic” at World Economic Forum in Switzerland

| January 27, 2013 | No Comments
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davosgloom-34801806Starting on Friday and every day since, the message coming from those who attended the World Economic Forum in Davos Switzerland, last week, seems to be one of coordinated optimism. A sort of collective “the worst of the economic crisis is over.”  Even “Dr. Doom,” Nouriel Roubini, the economist credited with predicting the 2008 crash, was notably less pessimistic in his major address. “I’ve not heard Dr Doom being less pessimistic for a long time,” said Dominic Barton, head of McKinsey. “I’m taking that as a pretty good sign.”  The great and the good, have had enough of 2008-2012s reality, it seems.

From the UK’s heavyweight Sunday Telegraph:

Mario Draghi, the chairman of the European Central Bank, said 2012 was the “year of the relaunch of the euro”; Anshu Jain, boss of Deutsche Bank, said central banks were “heroes, they’ve saved the world”; Jin Liqun from China Investment Corporation (CIC) said he expected “2013 to have great results”; and Angela Merkel, the German Chancellor, praised David Cameron.

Oleg Deripaska, the Russian metals billionaire, told The Sunday Telegraph: “Everyone’s more optimistic, there are no pessimists any more. It’s a great surprise for me.”

—-“Talk to people here, in the various sessions, they will tell you that they are more positive – that has a viral effect,” said Natarajan Chandrasekaran, boss of Tata Consulting Services, part of India’s $100bn Tata Group. “On Monday, back at work, they will say, ‘things are looking up, what can I do to participate?’”

Earlier during the week going into the Davos meetings, the International Monetary Fund raised its forecast of growth in the global economy in 2013 up to a more respectable 3.5 percent.  At Davos its seems to me, the agreed game plan has become one of talk up the recovery, talk up confidence, build up expectation of reviving growth. Drop pessimism!

From Germany’s Der Spiegel on Saturday:

In a further sign that the euro crisis is slowly starting to abate, 278 European banks said Friday they would repay the European Central Bank €137 billion ($184 billion) in emergency three-year low cost loans provided just a year ago. The earlier-than-expected repayment shows that at least some of Europe’s commercial banks are slowly weaning themselves off of indirect state support and are returning to health.

—- A total of 523 banks had participated in the first LTFO in 2011.

The new game plan is probably what was behind both Bank of America and Goldman Sachs Group Inc.  President Gary Cohn warnings last week  of a potential coming drop in fixed-income prices in 2013.

Call me an old fashioned Dinosaur, but I have serious doubts that the never ending crisis is over, nor that a sustainable recovery is underway. But my views don’t count at a time like this. If the Gospel from Davos is going to be confidence boosting, we are likely to see a media uplifting blitz over the next few weeks and months. A push to boost equities, talk down bonds, and very probably precious metals too. High risk speculators can try to trade through the coming next few weeks in precious metals, using purchased put and call options. Buying put options first, then later switching to purchased call options. Medium risk speculators can try to trade through the next few weeks simply by creating purchased synthetic precious double options.

Non trader investors in precious metals, holders for the long run against currency debasement, in my opinion, should just ignore the next few weeks of increased potential volatility. Looking for long term entry points against the eventual return of high inflation. Non holders of physical precious metals, should use any selloffs as an opportunity to look for entry points.

All of the above is just my opinion, after starting out in commodities trading all the way back in the stone age of 1968. All investors and potential investors should do their own due diligence, and use their own judgement relative to their resources and wealth, and likely upcoming commitments. No one has any obligation to give commission brokers a good living.

Davos 2013: The icy economic chill begins to thaw
New signs of optimism and confidence abound at the World Economic Forum, writes Louise Armitstead
Link

Improving Health: Banks Wean Themselves from ECB Support
European banks are planning to pay back cheap loans provided by the European Central Bank ahead of schedule, at the end of January. The move suggests that Europe’s financial sector is slowly recovering.
Link


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