I do not have any good news to share with the thread. Some sobering conversations I just got done with.
A friend of mine in the toys manufacturing business is having the worst time in 10 years. Another in textile manufacturing (NAV of around USD 100mm) is looking to relocate home from Hong Kong to Shanghai, shutting down 6 plants in ex-China locations (Thailand, Sri Lanka, South Africa, Mexico, Philippines) due to the worst business environment since 1991. These folks report a 30% decline in orders, and more alarmingly, that the US buyers (large outfits, like Gap, etc) are, instead of payment by Letters of Credit, demanding and getting goods on consignment, shifting their own intolerable debt crunch on to the manufacturers, who in turn are cutting output and volume to shrink their own respective balance sheet and output.
These folks are reporting US orders are falling much faster and deeper than European orders.
My Taiwan friends are reporting massive quantities (“all along the main streets”) street light pole and curbside posters and billboards advertising apartments and commercial properties for sale. The burning of buildings for insurance claim is ramping up.
My guesses …
Interest rate ? Down, then up.
Value of dollar ? Down, down, then up.
Global demand ? Down, down, down, then up.
Supply ? Down, down, down, down, then up.
Equity markets? Up, up, up, up, then up some more (yeah, you are right, I am kidding).
How to protect NAV without a lot of dancing through the long, short, equity, bond, currency markets? I haven't a clue, and on this, I am not kidding. I do know gold is being sold on the market at cost of mining.
Frankly, I do not see anything on the horizon that would prevent a slippery slide to disasters, deluge, depression and dissolution. At least not today.
Chugs, Jay |
