Shrugging off some lingering reminders of the credit crisis and recession, investors last week marked the one-year anniversary of the bear market low by pushing many benchmark equity indices to cycle highs.

Wall Street scaled 17-month highs on the back of easing concerns of sovereign debt defaults and increased hopes for a global economic recovery as the US dollar pulled back and the CBOE Volatility (VIX) Index approached 22-month lows. The Index is also referred to as the “fear gauge” of US stock markets and is used as a contrary indicator that moves inversely to equity prices, as seen in the chart below where it is plotted against the S&P 500 Index.

The Roosevelt Institute recently hosted an investment conference, Make Markets Be Markets, in New York City. All the presentations are posted on Vimeo, icluding speakers such as George Soros, Joseph Stiglitz, Simon Johnson, Jim Chanos and Elizabeth Warren. Click here if you have some spare time over the weekend.

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It would not take too much guessing to figure out where the bulk of the world’s construction activity is taking place. Of course, it is in China, but who would have thought global construction would decline from a year-on-year rate of almost 20% to close to zero once China is stripped out? This is what the fascinating chart below by CRU, WSD and Mcquarie Research (via Agora Financial’s 5 Min Forecast) highlights.

“The Chinese are laying highways like nobody’s business,” added Agora’s Chris Mayer. “By the end of 2008, China had an estimated 60,000 km of highway......

Dylan Ratigan talks with former New York Gov. Eliot Spitzer about the release of a 2,200 page report laying out a potential criminal case against Lehman Brothers, whose collapse led to a major financial meltdown.

Visit msnbc.com for breaking news, world news, and news about the economy

Source: The Dylan Ratigan Show, MSNBC.com, March 12, 2010.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail......

The image below shows the national debt history of the US as a credit card statement.

The Congressional Budget Office said this week (via Bloomberg) publicly held debt will zoom to $20.3 trillion, amounting to 90% of GDP, by 2020. By then, interest payments on the debt will have quadrupled to more than $900 billion annually.

Referring to the debt situation, Richard Russell (Dow Theory Letters) said: “If the Treasury and the Fed just stare at this figure and don’t do anything the compounding interest on $12 trillion will ‘eat us up alive’. With $12 trillion in national debt, the US must try to inflate.....

Are deficit hawks right about the dangers of mounting government debt? Or, is pursuing fiscal sustainability a recipe for continuing the economy’s downward spiral? BNN speaks to Marshall Auerback, fund manager, RAB Capital.

Click here or on the image below to view the video.

Source: BNN, March 11, 2010.

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Don Coxe has updated his popular webcast on Friday, March 12 - good news for his followers. You can access the recording here or from the sidebar of the Investment Postcards site (the column on the right-hand side) by clicking on Don’s photograph. Please note that access to Don’s recording works best with Firefox or the latest version of Internet Explorer.

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The video clips below provide a handy summary of the reports expected on the economic, financial and corporate front around the globe during the week ahead.

US: News
MarketWatch’s Stacey Delo has a preview of what will figure into the business and financial headlines in the coming week.

Europe: Bulgari, Inditex, Unicredit
Bulgari, Inditex, Unicredit earnings in focus. On the economic front, ZEW sentiment survey from Germany, Bank of England minutes.

Asia.....

Source: Luotjie, GoComics.com, March 7, 2010.

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An interesting chart comes from the Consumer Metrics Institute (via Clusterstock - Chart of the Day) that constructs a US consumption index based on actual transactions data for a range of major discretionary purchases such as cars, houses, durable goods, and vacations.

Although the time series is rather short, the “Daily Growth Index” usually leads changes in US GDP (see chart below). Based on the historical relationship, the Index would seem to indicate slower GDP growth ahead. This concurs with a recent analysis of the US ISM non-manufacturing and ISM manufacturing surveys posted on the Investment Postcards site about ten days ago.

I yesterday posted part 1 of a two-part interview with GMO’s James Montier. The interview comes courtesy of Miguel Barbosa, editor of the Simolean Sense blog, who has kindly given me permission to publish this excellent material here.

The second part follows below. (Please click here in case you missed the first part, dealing with value investing.)

Part 2: The Little Book of Behavioral Investing - How not to be your own worst enemy

* Image accessed via Amazon

Miguel: James thank you for joining us for.....

The Daily Reckoning Financial Darwin Awards recognize the efforts of companies that, through dedication to idiocy, ended their own lives. The recipient of the dumb-dumb award, as well as the names of the finalists, are given below.

Source: The Daily Reckoning, March 11, 2010.

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The comments below were provided by Kevin Lane of Fusion IQ.

Liquidity is a powerful tool. Given that liquidity goes hand in hand with sentiment, liquidity tends to be at its highest when equities are at their lows and investor sentiment is extremely dour; conversely, liquidity tends to be at its lowest when stocks are at their highs and investors are exuberant.

As seen in the chart below, the recent correction saw equities get back to almost a 5.00% allocation above the mean allocation. Typically this is an area vulnerable to shallow corrections, hence it was not a surprise to see a minor pullback recently.

Currently.....

Source: Unknown

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Madoff hunter Harry Markopolos talks with David Weidner about how the SEC has fared since the Ponzi scheme was uncovered, and about what kind of regulatory role he would accept in Washington.

Source: The Wall Street Journal, March 10, 2010.

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This post is a guest contribution by Rebecca Wilder*, author of the of the News N Economics blog.

Today I was thinking about tightening cycles in emerging markets, and more specifically about those in China. Because let’s face it, China matters. China matters to the rest of Asia via competition for export income. China matters to Europe via competition for jobs. China matters to Brazil via domestic production via imports. China matters.

The inflation pressures are building in key.....

Source: John Darkow, Comics.com, March 5, 2010.

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The bull market that commenced on March 9, 2009, has just market its first anniversary. A summary of the movements of major global stock markets for the past 12 months, as well as various other measurement periods, is given in the table below.

The MSCI World Index notched up one-year gains of 70.5%, whereas the MSCI Emerging Markets Index was on fire with +103.2%. As far as the US indices are concerned, the Dow Jones Industrial Index (+61.4%) and the S&P 500 Index (+68.6%) underperformed mature markets, but the Nasdaq Composite Index (+84.5%) and the Russell 2000 Index (+95.1%) gave investors reason to smile.

BRIC countries.....

James Montier needs no introduction to the readers of Investment Postcards. Prior to joining Jeremy Grantham’s GMO in 2009, he was co-head of Global Strategy at Société Générale. Montier is the author of several books, including Behavioural Investing: A Practitioner’s Guide to Applying Behavioural Finance, Value Investing: Tools and Techniques for Intelligent Investment, and The Little Book of Behavioural Investing.

A two-part interview with Montier comes courtesy of Miguel Barbosa, editor of the Simolean Sense blog, who has kindly given me permission to publish this excellent material here. The first part follows below and the second.....

I reported previously on the DiscoverCard Small Business Watch, i.e. monitoring small businesses with cash flow issues. As seen in the graph below (courtesy of Clusterstock - Chart of the Day), the situation has improved somewhat, although 49% of owners have still experienced cash flow issues in the past 90 days.

Without a turnaround in this situation, small businesses will not create jobs. And this is key to the overall economic recovery as small businesses are responsible for more than 60% of employment. When asked if they are likely to hire new employees if offered a $5,000 tax credit, such as the one proposed by the Obama administration, 69% said that it was.....