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Market Viewpoints

"How do you tell a Communist? Well, I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretence of taking care of them."

The Facebook IPO has come and gone and it has made Mark Zuckerberg a billionaire – many times over – and a Sucker-berg out of all retail investors who rushed in. Hype is not value. My fair value for a Facebook share is $20; however, I would wait to hear more about the company’s revenue growth plan before buying the stock even if it gets to this level. Greece has proven the point made by Margaret Thatcher about Socialism: eventually you run out of other people’s money. Germany is faced with two impossible outcomes – they take losses on the debt extended so far and suffer from, a rising Deutsche Mark (if the Euro then breaks up), or they tolerate high inflation and bear yet more fiscal transfer, if the Euro carries on as it is. Since it is difficult to work out the cost and benefit of each option just yet; the evidence so far suggests that Germany may be willing to give political integration in Europe a shot. The recent pullback in equity markets globally was primarily driven by the May 6 Greek elections, and fear of a Greece exit (or Grexit). I do not believe either a Greek exit or a Spanish bankruptcy is on the horizon. I am more inclined to believe that further ECB easing and European bank recapitalisation on the scale of the US (think TARP 2008), are the next actions in Europe

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