July 5, 2013
By Steve Blumenthal
Money will move to where it is treated best. One needs to have a global view and understand that we are deeply interconnected. The grand experiment moves forward and we are not alone in the chemistry lab. Europe, Japan, China and the U.S. are all printing on an unimaginable scale. Risk remains elevated.
This week, I discuss three relevant topics:
- France
- German bank crisis ahead
- Dangerous level of margin
France – high unemployment and economic depression creates strain – elections are coming
I always enjoy reading Ambrose Evans-Pritchard. Rates are spiking in Portugal (coming default), Austria has closed 25% of their bank branches in crisis and France is coming more clearly into focus. Ambrose has a constant finger on the pulse of the Euro crisis.
Pressure is mounting in France to leave the Euro. Marine Le Pen, leader of the Front National party which is polling in line with the current governing party states, “The four sticking points are the currency, border control, the primacy of French law, and what she calls “economic patriotism”, the power for France to pursue “intelligent protectionism” and safeguard it social model. “I cannot imagine running economic policy without full control over our own money”.
Asked if she intends to pull France of the euro immediately, Le Pen said: “Yes, because the euro blocks all economic decisions. France is not a country that can accept tutelage from Brussels.”
German Bank crisis ahead
Margin debt – note prior highs (this is cause for concern)
Incorporate risk management into your investment process. The cyclical bullish up trend remains in place (Trade Signals 7/3/13), yet risk protection should remain a focus and, fortunately, there are inexpensive ways to protect against major “tail risks” (crisis events). The global storm is far from over.
I’ll share some mid-year predictions in the next Blumenthal Viewpoint. Continue to broaden your portfolio construction by including liquid tactical strategies (unconstrained to benchmark investing), reduce fixed income risk exposure and have a focused hedge (risk management) approach on your long-term equity exposure.
Have a great weekend,
Steve
Stephen B. Blumenthal
Founder & CEO
CMG Capital Management Group, Inc.
Philadelphia – King of Prussia, PA
steve@cmgwealth.com
610-989-9090 Phone
610-989-9092 Fax
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