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

To: carranza2 who wrote (38710)	8/14/2008 6:18:38 PM
From: TobagoJack	Read Replies (2) \| Respond to of 217825

in beijing, all is well, everything works, party amongst relations is on for sunday just in in-tray per greed & FEAR · The medium term correction in oil and related commodities has begun and it is going to last for some time. Investors should reduce positions on any counter-trend rally in the resource and cyclical areas before further damage is done to their portfolios. GREED & fear continues to view the oil correction with some relief. Oil's parabolic move in the first half of this year made no fundamental sense given the biggest debt liquidation since the Great Depression going on in the Western world. · GREED & fear expects the US dollar rally to continue with a target of 1.25 to 1.3 on the euro. There will be three key drivers of the US dollar counter-trend rally. First, other countries will start cutting interest rates in 2008. Second, leveraged speculators will be forced to cover short dollar positions. Third, the US trade deficit will continue to collapse as US consumption continues to slow. · For Asia, the commencement of a major correction in oil and related commodities clearly comes as a relative relief. It should mean sustained relative outperformance for Asia in a global emerging market context. Still, the commodity correction has a mixed message for Asia. It is occurring because growth is slowing globally and Asia, as ever, remains in part a warrant on global growth. · GREED & fear's view remains that Asia has not seen the bottom of the correction. The ultimate bottom for Asia in this correction, caused by collateral damage from the West, is still expected to be around 400-430 on the MSCI AC Asia ex-Japan Index. This means a further maximum downside of 13% from the present level of 460. · The more short-term an investor's horizon, the more the investor should be using the recent bounce in interest rate-sensitive stocks in Asia to take profits and go into cash or cash proxies. Conversely, the more long-term an investor, the more they should keep accumulating the obvious domestic demand equity proxies in Asia. Both sorts of investors should remain aggressively underweight all stocks geared to the resource and cyclical related themes. · All the risks in oil and related cyclical areas are now for an overshooting to the downside. This is why Australia remains by far the most vulnerable stock market in the Asia Pacific context because of its toxic mix of consumer finance gearing and commodity gearing. · The fact that financial markets are finally realising that the global credit crunch is not just a US problem does not mean that America's problems are over. All that can be said is that the US is ahead in the debt deflation cycle, most particularly relative to Europe. · The fundamental news in America continues to deteriorate. The credit crunch is intensifying and now extending increasingly to the area of corporate lending. Investors should also be focusing on the growing risk of a further surge in prime mortgage delinquencies. These have already started to rise but there is clearly every risk of a further deterioration. · With their leverage already unsustainably high, the federal mortgage agencies need to be nationalised now and made formal instruments of federal government policy to rescue the housing market, at the cost of wiping out Fannie Mae and Freddie Mac's shareholders and subordinated debt holders. · The unwise Georgian incursion into South Ossetia has provided Russia with another opportunity to demonstrate its renewed power. Meanwhile, the Russian elite has of late demonstrated a seeming lack of concern about the local stock market. The most likely explanation heard by GREED & fear is that it is again accumulation time for powerful Russian domestic vested interests. · There is a view around that the super rich are never affected by economic cycles. But just because they can buy something does not mean that they will always want to be seen splashing out on expensive items. In GREED & fear's view the mood of the super rich is going to change during the next year from "How To Spend It" to "How Not to Flaunt It". Certain people, particularly the Russians, have not got the point yet. But the backlash is undoubtedly coming.