The Euro area April 2010 unemployment rate was 10.1%, up 0.1% from 10% in March and up 0.9% from a year ago.

This is the highest number recorded in the Euro area since August 1998.

The EU27 country unemployment rate reached 9.7% in April 2010, unchanged from the previous month and up from 8.7% in April 2009.

In comparison to March 2010, the number of people unemployment rose 25,000 in both the Euro area and the EU27.

Compared to a year ago the number of unemployed people increased 2.4 million.

The lowest unemployment rates were recorded in the Netherlands (4.1%) and Austria (4.9%), while the highest rates were in Latvia (22.5%), Spain (19.7%) and Estonia (19.0% in the first quarter of 2010).

Compared to a year ago Germany was the only country to record a decrease in the unemployment rate to 7.1% from 7.6%. Although this is a positive development too much should not be read into it as at the end of March 693,000 people still benefitted from kurzarbeit without which they would have unemployed.


Small increases were seen in Luxembourg (5.3% to 5.4%) and Malta (6.9% to 7.0%).

The highest increases were registered in Estonia (11.0% to 19.0% between the first quarters of 2009 and 2010), Latvia (15.4% to 22.5%) and Lithuania (11.2% to 17.4% between the first quarters of 2009 and 2010).

The Euro area has finally overtaken the USA (9.9%) in terms of unemployment and seems to be working itself higher still.

The last update available for Greece is December 2009. I am sure the next quarterly number will not look good at all.

Source: Eurostat

Definitions:
The euro area (EA16) consists of Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

The EU27 includes Belgium (BE), Bulgaria (BG), the Czech Republic (CZ), Denmark (DK), Germany (DE), Estonia (EE), Ireland (IE), Greece (EL), Spain (ES), France (FR), Italy (IT), Cyprus (CY), Latvia (LV), Lithuania (LT), Luxembourg (LU), Hungary (HU), Malta (MT), the Netherlands (NL), Austria (AT), Poland (PL), Portugal (PT), Romania (RO), Slovenia (SI), Slovakia (SK), Finland (FI), Sweden (SE) and the United Kingdom (UK).

Tim du Toit is the editor of Eurosharelab. Kindly note that this blog is published for information purposes and is not investment advice. Please refer to our disclaimer. To subscribe to our weekly newsletter, click here.

The Eurosharelab Blog is published by Serendipity Ventures (UG) haftungsbeschränkt a limited liability company incorporated in Germany. Our address is Von-Eicken-Str. 13A, 22529, Hamburg, Germany. Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Over the last weeks I have given a lot of thoughts to the idea of buying shares in the distressed oil company BP plc, after the stock price has fallen over 40 % since the end of April.

As you all know, the market’s reaction came after the worst oil spill in the history of the USA.

What is obvious is that BP is a strong and vital company that can weather almost any storm.

Really, I believe the bankruptcy rumours around the oil giant are not well founded and the result of the stress US politicians are under.

Indeed, BP is cash-rich and generated GBP 16.5 billion in profits in 2009.

However, the proportions of the Gulf of Mexico spill have raised concerns about litigation and the resulting damages BP faces.

It’s tough to distinguish facts from emotion when watching the media coverage of the spill.

In my immediate investment community I came across people who actively speculate on a BP recovery as well as who hold BP in their retirement or income accounts.

It seems easy to argue in favour of a speculative bet on BP.

The market’s reaction might be to short-sighted and BP stock could very well recover soon.But you must be able to bear the risk of further share price declines and highly volatile price moves.

The really difficult question to answer though is, whether or not you should keep your BP shares in your retirement or income account.

If you (as many others) to some extent rely on BP dividends for your income, you should definitely consider the following two points:

a)    Would it really devastate my portfolio if BP declined a further 50%?

b)    Would I be in financial trouble if BP stopped its dividend payments?

If you have answered “yes” to any of the above two questions you may want to consider trimming your BP position to a bearable level.

But should you sell all your shares? You would definitely not be the first seller as the current volume being traded is at a record high.

If you ask me, I would not bet the house on continued long-term dividend payments by the oil giant, but as there is a huge vested interest in continued dividends payments see Barack Obama's attacks on BP hurting British pensioners

At the end of the day a court of law and lot a bunch of hysterical politicians will decide what BP will have to pay. Until then shareholders will have to live with the volatility caused by wild outbursts.

In the meantime Whitney Tilson a hedge fund manager I greatly respect has bought some BP stock. The video clip where he puts the matter into perspective can be found here

Whitney Tilson Buys Into BP PLC

Tim du Toit is the editor of Eurosharelab. Kindly note that this blog is published for information purposes and is not investment advice. Please refer to our disclaimer. To subscribe to our weekly newsletter, click here.

The Eurosharelab Blog is published by Serendipity Ventures (UG) haftungsbeschränkt a limited liability company incorporated in Germany. Our address is Von-Eicken-Str. 13A, 22529, Hamburg, Germany. Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

I just came across a great essay by David Einhorn (the successful head of Greenlight Capital) in which he outlines his thoughts regarding public debt and inflation.

The New York Times op-ed article can be found here: Easy Money, Hard Truths

Unlike many other market observers, Einhorn does not only offer well-founded opinion, he has also shown amazing performance in the past which might lead us to believe that acting on his market observations will pay off well in the future.

What I found quite interesting is Einhorn’s comment on the risk transfer “from the weak to the strong“:

"As we saw first in Dubai and now in Greece, it appears that governments’ response to the failure of Lehman Brothers is to use any means necessary to avoid another Lehman-like event. This policy transfers risk from the weak to the strong — or at least the less weak — setting up the possibility of the crisis ultimately spreading from the “too small to fails,” like Greece, to “too big to bails,” like members of the Group of 7 industrialized nations."

Indeed, the G7 are "too big to bail“- a fact that should alarm everyone who has great exposure in apparently low-risk sovereign debt. Moreover, Einhorn clearly lays out why he thinks a significantly higher inflation is on the horizon.

The next logical question is how Einhorn positions his fund in the current macro environment. As I am not an investor in his fund, I can only draw conclusions from his quarterly letters (some can be found online).

Over the last few quarters he has explained that he sees great potential in gold and high-quality, low-cyclical stocks. This sounds somewhat similar to what I wrote two weeks ago in How to invest for inflation.

Tim du Toit is the editor of Eurosharelab. Kindly note that this blog is published for information purposes and is not investment advice. Please refer to our disclaimer. To subscribe to our weekly newsletter, click here.

The Eurosharelab Blog is published by Serendipity Ventures (UG) haftungsbeschränkt a limited liability company incorporated in Germany. Our address is Von-Eicken-Str. 13A, 22529, Hamburg, Germany. Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Unlike the headline-driven reports in the media these days here is my take on a currently ignored but very important investment topic, inflation.

As a long-term investor your ultimate goal should be a positive returns after tax and inflation.

In other words: you should not care whether or not you outperform an index- you want to increase your wealth in real terms after tax!

While you cannot control taxes the government deducts from your investment income, you can definitely structure your investment strategy with the goal to protect your wealth against inflation.

Believe me, significant inflation is quite likely around the corner.

To get a quick overview about the inflation situation you might want to read Warren Buffett’s Q&A at this year’s shareholder meeting of his company Berkshire Hathaway:

Peter Boodell’s Berkshire Hathaway Annual Meeting Notes

As a side note: the Q&A is not only worthwhile because of Warren's views on inflation it is also full of priceless advice on life and wealth building in general.

Back to inflation.

In order to best protect your investments from inflation, I would like to make the case for high-quality companies with decent pricing power.

Companies with pricing power can be divided into two groups:

Firstly companies that are rich in commodity or real assets, like my long-term favorite US natural gas company Contango Oil and Gas as recommended to my subscribers in September 2009.

I still think its a strong buy as its value is going to move up nicely if inflation starts rising and currencies depreciate. The same is applicable to British real estate investment company London & Stamford I have been recommending for some time.

While governments around the world can easily switch on the money printing press, I am not aware of any way to print Natural Gas or Real Estate!

Secondly companies that produce products of everyday use.  Here I am thinking of beer brewers, food makers, telecommunication companies or pharmaceutical companies. You might want to take advantage of the recent weakness in the stock prices of Deutsche Telekom, Vivendi or CCA Industries (other recommendations) to beef up your long-term strategic investments.

To make this short story shorter: if you want to make your portfolio inflation-proof, look for cheap entries into healthy companies that are likely to show strong profit growth - no matter how much the government inflates our money.

Tim du Toit is the editor of Eurosharelab. Kindly note that this blog is published for information purposes and is not investment advice. Please refer to our disclaimer. To subscribe to our weekly newsletter, click here.

The Eurosharelab Blog is published by Serendipity Ventures (UG) haftungsbeschränkt a limited liability company incorporated in Germany. Our address is Von-Eicken-Str. 13A, 22529, Hamburg, Germany. Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

The Graham & Doddsville investment newsletter from the students of Columbia Business School is always a good read.

The Spring 2010 issue further builds on this reputation, featuring interviews with:

• Glenn Greenberg is the founder and portfolio manager of Brave Warrior Capital. (Previously with Chieftain Capital Management)

• Mike Blitzer and Guy Shanon the Managing Partners of Kingstown Partners, LP, a   $285M special situations partnership that has generated compounded returns of 17.2% net of fees since its inception in early 2006, versus negative returns For the S&P 500, and

• A talk given by Jeremy Grantham where he gave his thoughts on the volatile markets of 2008 and 2009, including some sharp criticism of the common interpretation and practice of  “Graham  & Dodd” style value investing. 

Here is the link: Graham & Doddsville Newsletter Spring 2010

Tim du Toit is the editor of Eurosharelab. Kindly note that this blog is published for information purposes and is not investment advice. Please refer to our disclaimer. To subscribe to our weekly newsletter, click here.

The Eurosharelab Blog is published by Serendipity Ventures (UG) haftungsbeschränkt a limited liability company incorporated in Germany. Our address is Von-Eicken-Str. 13A, 22529, Hamburg, Germany. Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it