San Francisco, CA— To further the ties of friendship and understanding between San Francisco and Barcelona, Spain and to affirm their mutual
aspiration to work in unison for the benefit of their cities and nations, Mayor Gavin Newsom, joined by a trade delegation on behalf of the Honorable
Jordi Hereu, Mayor of the City of Barcelona, today signed a declaration strengthening ties and establishing a sister city relationship between the
two cities. This declaration marks the 18th sister city for San Francisco.

“The sister city accord is a recognition of the historical, cultural, political and institutional ties between San Francisco and Barcelona as
well as an official declaration of intent to nurture and strengthen new and existing partnerships in all areas of civic life,” said Supervisor David
Campos.  “Amongst many other things, a shared outlook on the world and the prospect for increased economic interaction make San Francisco and
Barcelona well-suited to be sisters.”

“The new Barcelona Sister City partnership will help strengthen ties between the people of San Francisco and the people of Barcelona,” said
Fariba Rezvani and Maria Andrews, Co-Chairs of the newly formed San Francisco- Barcelona Sister City Committee.  “We look forward to working
cooperatively to promote trade, tourism, and business between the two cities.”

CONGRATULATIONS !!!

Courtesy of Robert Prechter :

“Some people contact us and say, “People are more bearish than I have ever seen them. This has to be a bottom.” The first half of this statement may well be true for many market observers. If one has been in the market for less than 14 years, one has never seen people this bearish. But market sentiment over those years was a historical anomaly. The annual dividend payout from stocks reached its lowest level ever: less than half the previous record. The P/E ratio reached its highest level ever: double the previous record. The price-to-book value ratio went into the stratosphere, as did the ratio between corporate bond yields and the same corporations’ stock dividend yields.

During nine and a half of those years, from October 1998 to March 2008, optimism dominated so consistently that bulls outnumbered bears among advisors (per the Investors Intelligence polls) for 481 out of 490 weeks. Investors got so used to this period of euphoria and financial excess that they have taken it as the norm.

With that period as a benchmark, the moderate slippage in optimism since 2007 does appear as a severe change. But observe a subtle irony: When commentators agree that investors are too bearish, they say so to justify being bullish. Thus, as part of the crowd, they are still seeking rationalizations for their continued optimism, and one of their best excuses is that everyone else is bearish. This would be reasoning, not rationalization, if it were true.

But is the net reduction in optimism since 2000/2007 in fact enough to indicate a market bottom?”

We for sure, do not think so !!!

Muchas felicidades a la Roja por situar a España como número UNO del Football Mundial !!!

Tras un partido trepidante y contra pronóstico, la “ROJA” se ha clasificado para su primera final de la WORLD CUP. Desde aquí felicitamos al equipo y les deseamos lo mejor !!!

As we have said many times lately, history rimes… Today´s world looks very much alike the 30s… See what David Rosenberg has to say about it:

“DARING TO COMPARE TODAY TO THE 30’S
Coming off a crash (‘29) and rebound (‘30); aftermath of an asset deflation and credit collapse banks fail (Bank of New York back then, Lehman this time around); natural disaster (dust bowl then, oil spill now); global policy discord (with the U.K. then, with Germany now); geopolitical threats; interventionist governments; ultra low interest rates (long bond yield finished the 1930s below 2%); chronic unemployment (25% then, 17% now); deflation pressures; competitive devaluations; gold bull market (doubled in Sterling terms in the 30s); debt defaults; sputtering recoveries and rallies; onset of consumer frugality.”

As we recommended at the end of 2009 : “We believe that the dominant focus should be on Capital preservation and Income orientation in any form of investment ( bonds, hybrids,Hedges,etc…) and consistent focus on reliable dividend growth and dividend yield.” (http://www.lateralthinking.biz/2010-forecast-new-normal-new-frugal.html)

Be careful out there !!!

The following note comes to us courtesy of Chad Starliper, the CIO at Rather & Kittrell:

“The 13-week annualized rate of the WLI is now at -23.46%, something that usually only happens in, or prior to, recessions. This is very ominous economic momentum. I haven’t seen anyone look at it this way, I suppose because the ECRI publishes their own smoothed growth rate.”

And from David Rosenberg :

“For the week ending June 11th, the ECRI leading index (growth rate) slipped for the sixth week in a row, to -5.7% from -3.7%.  Only once in the past – in 1987, but the Fed could cut rates then – did this fail to signal a recession.  But a -5.7% print accurately signaled a recession in the lead-up to all of the past seven downturns.”

It seems that with the double dip in housing being inminent, the Economy will have a tough end of the year !!!

SYMBIOSIS : Interaction between two different organisms living in close physical association, typically to the advantage of both.

We are not really sure that we will get this “typically to the  advantage of both ” this time…

The cost of doing business in China is going up.

FT: ” Chinese labour protests that have forced shutdowns at foreign factories have spread beyond south China’s industrial heartland, posing a dangerous new challenge for Beijing.”

Coastal factories are increasing hourly payments to workers. Local governments are raising minimum wage standards. And if China allows its currency ( Renmimbi) to appreciate against the United States dollar later this year, as many economists are predicting, the relative cost of manufacturing in China will almost certainly rise.

The salaries of factory workers in China are still low compared to those in the United States and Europe: the hourly wage in southern China is only about 75 cents an hour. But economists say wage increases here will eventually ripple through the global economy, driving up the prices of goods as diverse as T-shirts, sneakers, computer servers and smartphones.

The shift was illustrated last Sunday, when Foxconn Technology, one of the world’s largest contract electronics manufacturers and the maker of products that include iPhones, said that it was planning to double the salaries of many of its 800,000 workers in China, beginning in October. The new monthly average would be 2,000 renminbi — about $300, at current exchange rates.

Honda is following the same path after a strike. So in between strikes and protests maybe China is becoming the new engine for Inflation…

The PIIGS family is growing  to include Hungary as a spokesman for the PM of Hungary said their economy is “in a grave economic situation” and the possibility of default is “not an exaggeration.”!!!

Markets rolled over after the comments and the euro fell to a new 4 year low vs the US$. Hungary 5 yr CDS is higher by 15 bps to 323 bps, the highest since July ‘09. Hungarian stocks are lower by almost 4% and European banks are all lower including rumours that SG ( Societée Generale ) has a huge exposure to Eastern Europe through derivatives exposure.

The possibility of Europe heading towards a double deep recession whenever Greece, Portugal, Spain, Ireland, Italy, and now Hungary apply restrictive medicine is becoming a REAL possibility. If that happens, US will follow as it happened in 1931…