Global Macro Monitor

Did Soros Just Predict a China Crash? – Bloomberg

“There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years,” Soros wrote…

…China’s financial system is the ultimate black box. 
You don’t have to be a genius to conclude that when JPMorgan Chase estimates shadow banking to be 69 percent of China’s 2012 gross domestic product, it’s a wildly conservative guess. I wouldn’t quite add a zero, but if China fudges trade and other run-of-the-mill data, you can imagine the lengths to which it goes to hide the magnitude of its credit bubble…

…”There are some eerie resemblances with the financial conditions that prevailed in the U.S. in the years preceding the crash of 2008,” Soros wrote. “But there is a significant difference. In the U.S., financial markets tend to dominate politics; in China, the state owns the banks and the bulk of the economy, and the Communist Party controls the state-owned enterprises.” He added: “How and when this contradiction will be resolved will have profound consequences for China and the world.”

Fed to ‘proceed cautiously’ with taper – FT

…The minutes show that was intended to calm market fears of a quicker exit rather than signal the Fed was in a hurry to end the QE3 programme.

The minutes show there was a strong consensus behind the Fed’s decision to taper. “Most participants saw a reduction in the pace of purchases as appropriate at this meeting,” they say…

…Even though most participants supported the decision to taper, several others “stressed that the unemployment rate remained elevated, that a range of other indicators had shown less progress toward levels consistent with a full recovery in the labour market, and that the projected pickup in economic growth was not assured.”

There were also concerns that inflation was too low, indicating that there was some dissent on the rate-setting Federal Open Market Committee, and there is still a group that will push for easy policy to support the economic recovery…

…“Most participants judged the marginal costs of asset purchases as unlikely to be sufficient, relative to their marginal benefits, to justify ending the purchases now or relatively soon,” say the minutes. Only a “few” participants thought otherwise.

Most of the FOMC thought that asset purchases were still having a positive effect although a majority though the positive effect was diminishing.

“A majority of participants judged that the marginal efficacy of purchases was likely declining as purchases continue, although some noted the difficulty inherent in making such an assessment,” say the minutes.

Active ETFs That Beat The Market In 2013 – ETF Database

Wall Street awards no points for fancy algorithms or complex rotation strategies, so what matters at the end of the day, or rather the year, is whether or not the extra percentage points you pay for your actively-managed strategy are earning you extra percentage points compared to what you could have achieved with a passive ETF linked to a traditional benchmark.

• (RWG, C): This fund seeks long-term capital appreciation by focusing on U.S. large-cap stocks that exhibit above-average growth prospects; some of the top holdings that bolstered this ETF to the top of the ranks include Michael Kors (KORS), Priceline.com (PCLN), and VMware (VMW).

• (TTFS, B): This fund looks to outperform the Russell 3000 Index by adhering to “Liquidity Theory,” which offers an insightful way to analyze security prices that doesn’t rely on standard valuation metrics. TTFS boasts an equal-weighted portfolio, including exposure to Allergan (AGN), Oracle (ORCL), and Citrix Systems (CTXS).

• (FWDD, C+): This ETF uses a weighted allocation methodology that selects and weighs large-cap stocks from the S&P 500 Index based on consensus analyst estimates of the present value of future expected earnings. This forward-looking approach features allocations to Micron Technology (MU), PulteGroup (PHM), and Whirpool (WHR), although the portfolio as a whole is very well-balanced.

• HUSE: This ETF strives to beat the S&P 1500 Index by identifying and overweighting the companies that may experience more profitability given the current economic cycle at hand. Some of HUSE’s holdings are Apple (AAPL), Google (GOOG), and Exxon Mobil (XOM).

• (RPX, C+): Similar to RWG, this ETF aims to pick large-cap stocks deemed to have above-average growth prospects. Some of RPX’s top holdings include Apple, Google, and Gilead Sciences (GILD).

• (GVT, C): This ETF uses a bottom-up stock selection process to select value companies from the Russell 1000 Index. Some of GVT’s top holdings include Wells Fargo (WFC), Applied Materials (AMAT), and Tyson Foods (TSN).

• (HECO, C): This ETF just barely managed to beat the market by targeting ecologically-focused companies, including eBay (EBAY), Whole Foods Market (WFM), and The Hain Celestial Group (HAIN).

The Breakthroughs in Tech to Watch for in 2014 – Bloomberg (video)

Jan. 8 (Bloomberg) — Julian Jest, a research analyst with Informa Telecoms & Media, discusses the hot technology trends to watch for in 2014 with Mark Barton on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

The Five Weirdest Products Unveiled at CES – Bloomberg (video)

Hapifork:  Eating too Fast?  Fork vibrates when you’re overdoing it.  Cost: $100