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

To: elmatador who wrote (45343)	1/15/2009 9:05:40 PM
From: TobagoJack	Read Replies (1) \| Respond to of 217770

just in in-tray · GREED & fear is not going to give up all hope of more of a relief rally because Obama is due to take office next week and it is still possible that he springs a positive policy surprise in his opening weeks in office. Beyond the much discussed fiscal stimulus, there is also likely to be some forbearance policies for extended mortgage borrowers. · But what would make GREED & fear more fundamentally positive would be some version of the Swedish model applied to the distressed US banking system. The obvious time to implement such a plan is upon the arrival of a new government. The Swedish model is the only practical way to address the Western banking crisis. · Until the seemingly inevitable end game of full-scale nationalisation is reached, GREED & fear will continue to recommend that the long-only Asian and Japanese portfolios be hedged by remaining short Western financial stocks. · Britain is not just experiencing a credit crunch. Rather it is experiencing a vicious asset-deflation cycle which shows every risk of becoming a fully-fledged economic slump. GREED & fear continues to maintain the long-held view that Britain will be the global economy most devastated by the ongoing implosion of the global financial services industry. · The lack of the equivalent of a Fannie or Freddie means that the British residential property market is imploding fast. The only good news here is that market clearing is taking place. · If sterling's interest rate premium over the likes of US dollar and the Swiss Franc disappears, as now seems inevitable, there seems little reason to hold the currency. The path of least resistance is for the Bank of England to follow the Fed towards near zero interest rates. · Financial markets are increasingly focusing on the ugly fissures appearing within Euroland. GREED & fear's long recommended PIIGS trade for macro investors continues to work well. There is a reasonable possibility that the news flow from Europe will be more negative in the next six months than from the US. This is one reason why GREED & fear is not convinced that the US dollar is about to collapse in the short term. · GREED & fear continues to believe that the ECB will never go to the extreme lengths of the Fed in terms of the pursuit of so-called unconventional monetary policy because of the prevailing German influence. Remember for Germany, like Asia, this is a cyclical shock not an asset deflation unwind. · The latest Chinese import data has further underlined concerns on the China economy, seemingly providing further evidence that it is an export-correlated train wreck with the US consumer. Still there are some initial encouraging signals of domestic-demand traction. · Investors should not dismiss out of hand the chance of the PRC gaining some traction on its domestic economy via its aggressive reflationary tactics. In a world where GREED & fear remains highly sceptical of the Fed gaining traction on monetary policy in terms of reactivating the credit multiplier, Beijing's efforts may be the best thing going for the world economy this year and very likely the best thing for Asia and other emerging markets. · The issue of Satyam is clearly a major negative which will encourage old prejudices towards India and, indeed, towards emerging markets in general. Another increasingly obvious risk is that entrepreneur-dominated companies are vulnerable because of heavy personal borrowing by these entrepreneurs against their own share prices. · GREED & fear continues to take the view that Australian financials will be the last area of Anglo-Saxon consumer financing excess to bottom with, as in Britain and America, the seemingly inevitable involvement of taxpayer money before the end of the cycle. GREED & fear also continues to recommend that Asia Pacific relative-return investors maintain a zero weighting in Australian financials. · Australian banks are characterised by high loan-deposit ratios and low loan loss provisions. The household sector is extremely leveraged while the former high flying residential property market is weakening fast.