The November edition of Donald Coxe’s Basic Points research report (subtitled “The Power of Zero”) has just been published. His investment recommendations, as summarized in this document, are listed in the paragraphs below, but I do recommend you also read the full report at the bottom of the post. (Also note that Donald’s weekly webcasts can be accessed from the sidebar of the Investment Postcards site.)

1. Remain underweighted in US equities-as a percentage of total equities within global portfolios, and as a percentage of assets in US balanced portfolios. Underweight US bonds in global portfolios.

The Obama long-term financial projections for the US are high risk and unsustainable. Forthcoming elections-or a currency crisis-could induce some discipline, but within the OECD, the US should probably no longer be accorded top ranking for bonds and stocks.

2. Within the US market, underweight US economy-related

By Cees Bruggemans, Chief Economist FNB.

After a great fall (2008), success in arresting the fall and stabilizing the economy on a low level of capacity utilization (2009), growth prospects tend to be very promising as slack resources as well as new inputs will be available to be put to work. Demand needs to grow in order to put such available resources to work.

Potentially this will be so for years to come (2010-2020) as any new supply imbalances eventually ending the next growth expansion (balance of payments, inflation) could remain manageable for the time being.

This, in a nutshell, is the case for growth.

It then gets better, but it also gets worse. For the global environment looks even better than this simple base case, offering piggyback opportunities for small open economies like ourselves.

This very favourable global environment, however, may also prove to offer a too rich

By Cees Bruggemans, Chief Economist FNB

The forces arraigned against the Rand are rather formidable and no collapsed corporate deals seem to matter too much. The Rand is rising and will rise.

Pushing the Rand higher are the major central banks at the global centre (New York, Frankfurt, Tokyo, Zurich, London), keeping interest rates near zero and encouraging outward liquidity leakage towards faster growing and still outperforming yield destinations in the global periphery.

Pulling the Rand higher are a smattering of central banks located in the global periphery as they start increasing their rates, led by the Bank of Israel two weeks ago, but last week followed by the Reserve Bank of Australia, with others expected to follow serially in coming months.

With their growth reviving, small output gaps, house prices and employment rising and industrial activity recovering, these central banks are uncomfortable with their too low interest rates imposed during

By Cees Bruggemans, Chief Economist FNB

Are we really fighting inflation?

There are times when understanding inflation is easy. Big demands are placed on all resources, shortages arise, profit margins can be inflated, cost and price increases easily passed on, in a spiraling kind of way.

Expectations of accelerating price increases (faster inflation) become embedded and feed the inflation spiral.

Handling that is easy. You hit it on the head. Less easy to handle is the output sacrifice incurred along the way as demand falls, resource slack builds up, discipline is restored to expectations and price acceleration is with difficulty transformed into price deceleration, even price freezing or declines.

Output sacrifice implies pain. Reduced real wages. Unemployment. Hardship. Always difficult to accommodate, especially in a democracy where leadership incompetence is quickly criticized (”You owe me full employment, a rising living standard and everything I haven’t got yet. Deliver or

By Cees Bruggemans

After massive shocks savaged the economy last year, by 4Q2008 (really already 3Q2008) putting us into recession, the only question basically mattering now is whether there are yet more of these massive shocks to be absorbed shortly. For if we are, we will remain probably repressed, recessed if not depressed for much longer.

But short of a large meteorite striking the southern oceans, and wiping out our living space, I am having little success identifying the rogues that will do us in.

Perhaps I am not looking hard enough?

For could the global banking system still encounter a relapse, with another big bankruptcy, fragile nerves failing once more spectacularly, yet with global policymakers by now having shot away all their ammunitions, their cupboards bare of the means to address yet more catastrophic failures?

Then again, have global policymakers already overreached themselves, burdening their national finances and