<<Post some photos here for us to see>>
naughty, very naughty :0) yes, us plebs would like to know what it is really like.
some folks cannot ever be original in their imaginations, limited in all senses, and so must exist his wastrel life through someone else's hoped-for imagination, where as all he is doing is providing a sad lesson by third hand.
it is like, as woody allen once noted, that he was in the final moments of life, and a life fleshed before his eyes, but then he realized it wasn't his life ;0)
delicious.
in any case, in the mean lean times, just in in-tray
Subject: GREED & fear - 26 June, 2008 - The oil standard
· GREED & fear continues to believe that the Fed will not raise interest rates at all in 2008. The action in the US financial indices can only be considered very negative in the deflationary sense. The last thing US financial stocks need in this context is higher short term interest rates.
· There is a major problem building in plain vanilla American commercial banking and not just in structured finance, where many of the lurking losses continue to be camouflaged. The US data continues to show a deteriorating trend in the American economy, and in particular the housing sector which is the collateral against which so much plain vanilla as well as structured synthetic debt is based.
· The continuing deterioration in the value of US housing collateral raises the obvious risk of a further large increase in the default rate on mortgages. There is every likelihood that mortgage delinquency and foreclosure data are going to get worse; most particularly as there remains little prospect of a major taxpayer funded bailout of the housing market prior to the November presidential election.
· Bernanke's efforts to talk down the price of oil are unlikely to succeed if he is not prepared to follow through on his tough talk. And oil continues to remain the critical short-term variable for financial markets, most particularly Asian stock markets.
· GREED & fear continues to believe that one major reason for oil's extraordinary price rise this year, in the context of slowing global growth, has been the Fed's aggressive easing. In this sense the world has moved, albeit doubtless temporarily, on to an informal oil standard as confidence increasingly erodes in the US dollar paper standard.
· GREED & fear would use any countertrend relief rally off current levels in Asia to reduce further high beta positions unless there is convincing evidence that oil has peaked. GREED & fear would define such evidence as oil breaking below US$120 a barrel. It would be more convincing if such an oil decline coincided with the US dollar rallying above the 75 level on the US dollar index.
· Stock markets still face the risk of oil going more parabolic most particularly if investors start to assume, as GREED & fear does, that the Fed will never raise rates this year. Such a further sharp rise in the price of oil would be plain bad news for Asia. It would surely mean that Asia breaks the March intraday low of 479 on the MSCI AC Asia ex-Japan Index.
· A further rise in the oil price will continue to be particularly bad news for India. This is both despite and because of the Reserve Bank of India's increasingly pre-emptive monetary tightening stance. A re-test of the 12,000 level on the Sensex cannot be ruled out in these circumstances. Still GREED & fear would view a decline to that level as a massive long-term buying opportunity in India and the rest of Asia.
· In GREED & fear's view the current growing inflation noise in Asia will quickly disappear on any sustained decline in the oil price. But a further rise in oil can only be bearish for the region since there will be growing focus on the deteriorating terms of trade for Asian economies, and the resulting need for higher interest rates to fend off potentially destabilising currency depreciation.
· GREED & fear's view is firmly that there is no systemic risk in Asia of another "Asian Crisis" given the lack of leverage. Rather the systemic risks globally are all in the Anglo-Saxon world.
· An oil-driven inflation spike offers the best hope of jolting Japan, electric-shock style, out of its deflationary psychological malaise by forcing the Bank of Japan to normalize interest rates. This is why rising inflationary expectations are a positive in Japan even if it is "bad inflation". It is also why Japanese equities will continue to outperform Asia ex-Japan equities so long as the oil price is rising.
· The weighting in Singapore in the Asia ex-Japan relative-return portfolio will be increased by 3ppts to neutral. Singapore has less of an inflation problem than many other places in Asia and the bad news on the residential property sector may be close to peaking. This move will be paid for by shaving the weighting in Thailand by 2ppts to neutral and by adding to the underweight in India by 1ppt.
· The politics in Thailand has unfortunately become murky again with the renewed risk of growing confrontation between pro and anti Thaksin elements. A further rise in oil from here will likely force a reluctant Bank of Thailand to start raising interest rates.
· There continues to be growing noise from Democrats in Washington to take action to counter "commodity speculation". GREED & fear's guess is that the oil price is yet not quite parabolic enough to prompt immediate action on this front. Still the risk of action by Congress grows every day that oil stays above US$130. And if oil starts spiking again such action becomes almost inevitable.
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