Archive - May 4, 2011

In what could be the watershed news event of 2011, Dow Jones reports that Asean+3 governments (virtually every Asian country including China, Japan and South Korea), "have been concretely studying the idea of a common currency, though an internal paper shows anything like a euro for the region is still far off." In what appears to be Asia's attempt to recreate the Euro, "an Asian "regional monetary unit" could provide a helpful macroeconomic monitoring tool and its use could in time be expanded to include official and private transactions, according to a study by a high-level research group reporting to Asian officials." So for all those complaining that the Yuan would not be able to compete with the dollar as a reserve currency, how about a basket of currencies which includes the Yuan, the Yen, and virtually every other growth currency. It is only fitting that as a last ditch effort to save the current globalized system, as we see the last days of one failed "aggregator" currency, we get the inception of another.

Even though Portugal announced somewhat sparse details of a €78 billion IMF/EU bailout late yesterday, the market was only modestly impressed, and even though Portuguese CDS dropped 29 bps to 620, according to CMA at 10:10 a.m. in London, the country still saw the yield on its just issued 3 Month T-Bills surge to a fresh all time record. From Reuters: "Portugal sold around 1.12 billion euros ($1.66 billion) in three-month T-bills on Wednesday, above the indicative offer, with yields rising from an auction late last month even after the country said it agreed a 78 billion euro EU/IMF bailout. The average yield rose to 4.652 percent from 4.046 percent in an auction on April 20. Portuguese debt premiums in the secondary market had risen sharply in the past two weeks on jitters about a possible Greek debt restructuring and concerns about Portugal's own fate, but retreated after the bailout deal." And to confirm that the market no longer really beleives in the bailout fairy, the Bid to Cover dropped from 2 to 1.9.

Like last year, I took on the unenviable task of trying to capture everything that was said at this year's Berkshire Hathaway annual meeting. Over 18,000 words and 24 pages later, I hope my notes provide a fair representation of what Munger and Buffett had to say.