We believe that we are in year eleven of a sideways or range bound market. Range bound markets are characterized by volatility and historically have lasted a minimum of 15 years.
On April 25, 2011 the world’s largest gold producer, Barrick Gold (market value $44B), announced their intention to buy the copper producer Equinox Minerals for $7.3B.
Sub-prime resets (mortgages that were initially sold with low “teaser” rates, after a set period of time then rise to market levels, leading in some cases to significantly higher monthly payments) will remain high until March 2008, and then defaults will set in a few months later as it takes time for borrowers to finally throw in the towel. We suspect that the magnitude of global credit problems will be better known by June 2008. We believe it is prudent and cautious to modestly underweight financial services and banks until the full magnitude of the challenge is better understood.