Overnight markets were aggressively higher, gaining 3-5%. The proximate cause for all of that joy was the belief that somehow Europe would find a way to unleash giant amounts of money from the ECB printing press by leveraging up the EFSF and possibly creating a new vehicle as well. I am hazy on the details, as is everyone else, and it is not at all clear that such steps are even possible yet, but for the moment hope has trumped reality once again.
I do think at some point the ECB will find a way to print money, but thus far it has been unable (and unwilling) to. Short of that, I don't see how the guardians of the EMU will be able to buy enough time to get the markets to stop focusing on the sovereign debt/banking problems as intensely as they have been.
Stocks here joined the party and within an hour of the open the indices were 2% higher. They kept climbing and had gained almost 3% with 90 minutes to go. But from there they dove and finished in the green by around 1%. Away from stocks, everything took a deep breath. The dollar was weaker, as were bonds, and oil gained 4%. Silver sported a gain of nearly 10%, trading as high as $33, before closing with a gain of 4%. Gold added a couple of percent at the highs, but closed just 1.5% higher. All in all, it was a big snap back everywhere from the recent declines.
Yes, We Khan
Now that the markets have calmed down a little bit, I would like to share a few observations from my recent trip to Mongolia. First of all, from what I could see and the people I met, it has a very hard-working, energetic population. I guess when you are descendents of nomads, you tend to be pretty self-sufficient and not inclined to look for handouts. I think the opportunities there are going to be quite open-ended, though challenges will certainly be part of the equation.
Unfortunately, the air quality is not all that great, but I expect as citizens there become wealthier, and some become quite rich, that problem will be tackled. Transportation is also an issue. The way Ulaanbaatar is laid out, traffic congestion is going to be a feature for quite some time, though that does present other opportunities from a real estate investment standpoint.
More Than Just Talking Their Book
As for the socio-political realm, it seems that capitalism is pretty well rooted there. Since it is formerly a socialist country, folks have seen what that failed experiment looks like. Along that line, Comrade Kuppy told me that "Atlas Shrugged" was the number one English language book translated into Mongolian, which tells you something about how the people view capitalism versus socialism.
Perhaps the highlight of the trip was meeting the deputy governor of the Mongolian central bank. He was a breath of fresh air, common sense-oriented, and not a believer in central planning at all (and he hates the IMF). He stated that he thought Mongolia would be "heaven" for investors, and that if "China's growth rate dropped to zero, Mongolia would still be fantastic." While I was there I also opened a bank account, which can only be done in person and for business reasons, as they are trying to keep hot money inflows to a minimum.
