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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (35273)	5/29/2008 8:39:36 PM
From: TobagoJack	Read Replies (1) \| Respond to of 217944

just in in-tray, from "GREED & fear" · Oil remains the key short-term variable for most equity trades in Asia. For example, if the price keeps going up, Indian stocks and the rupee both suffer badly. By contrast, if oil corrects sharply, Indian stocks and the rupee will both rally sharply. · If oil goes more parabolic the risk of a bipartisan political consensus attacking commodity "speculators" becomes much more likely. One possibility is much higher margin requirements on commodity futures trading. Another possibility is that commodity futures trading is limited only to those who have physical positions to hedge. A third possibility is that investing in commodities on an index basis is simply banned. · A further parabolic move in the oil-led commodity complex would ultimately sow the seeds of its own destruction by not only forcing a political response but also precipitating a demand response. Another development which could cause a sudden steep oil correction would be any sign of China deciding to reduce subsidies. · There is clearly a possibility that prices are already near to peaking. The oil market fell back last week into contango, in the sense that the long-dated futures prices are higher than the near dated ones. The other point is that many other hard and soft commodities have commenced corrections. · The flow of US-related housing data continues to suggest that conditions will get worse before they get better; most particularly as there seems less likelihood of bipartisan consensus in Congress on a housing bailout than such a consensus on attacking commodity speculation. GREED & fear continues to assume that the consumption trend will continue to weaken in America this year. · The near fatal collapse in securitisation activity not only has negative implications on the revenues of financial service players. It also has real contractionary macro-economic implications. The growing regulatory pressure in America on banks to reduce predatory consumer lending is also likely to lead to less credit availability for those most in need of it. · While US financial stocks have retreated this month, Treasury bond yields have continued to rise. This is an interesting departure from the Japanese-style trend in place since the credit crisis erupted last August, since when US financial stocks and Treasury bond yields have been correlated. · The continuing resilience of residential rents in Hong Kong is in stark contrast to what happened between 2003 and 2005 which was the last time residential property prices rose. It means there is a growing incentive for people who now rent to decide to own. · GREED & fear is not going to give up on the Hong Kong residential property story. Sentiment has clearly deteriorated in 2008. But the reality is that prices are still rising. The real risk to Hong Kong property is much higher US interest rates, a development GREED & fear finds hard to envisage given the supine nature of the Fed, short of a complete dollar collapse. · Brave speculators should go long Vietnamese dong futures. A published inflation rate of 25% YoY for May has sent the normally remarkably unvolatile Vietnamese currency into a spasm. What appears to have given rise to this scare was foreign investors in Vietnamese equities seeking to hedge their losing equity positions by trading in the CDS market on Vietnamese sovereign bonds. · The unwind in the Vietnamese stock market continues to be dragged out by the government having imposed a 2% daily limit on share price movements. The buying opportunity for would be bargain hunters is not as great as it might be since the best shares are still at their foreign investor limits. · Investors should remain overweight Japan. They should also note that the 10-year JGB yield is approaching the key 2% level. A break out would be hyper bullish for Japanese bank stocks.