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

To: elmatador who wrote (48112)	4/3/2009 12:41:08 PM
From: TobagoJack	Read Replies (1) \| Respond to of 219937

translator just in in-tray · GREED & fear is still looking in vain for any mea culpa from the leaders of the indebted West at the G20 summit for having inflicted such collateral damage on the global economy. The one material consequence that might emerge from all this nonsense is a significant recapitalisation of the IMF. · This week’s move towards a “controlled bankruptcy” for GM and Chrysler is the first encouraging indication that the new president is able to govern as opposed to just talk pretty. There has certainly been no such hard evidence as yet of this in terms of the Obama administration’s dealings with the banking sector. It is positive that Washington finally seems to recognise that Chapter 11 offers the best possible hope, however slim, of GM restructuring itself into some viable if shrunken form. · The biggest risk for Japanese carmakers is a wave of supplier insolvencies triggered by Detroit’s problems, which would threaten the Japanese carmakers’ own US production. The positive point is obviously increased US market shares not only for the Japanese but also for Hyundai Auto. But the other key issue nearer term for Japanese carmakers is the yen. · GREED & fear is increasingly of the view that the yen is in the process of peaking, given the contraction in the current account surplus, the plunging Japanese savings rate and the increasingly scary government debt burden. · GREED & fear still feels under exposed to exporters in the Japanese absolute-return portfolio despite the grim end-demand environment. The existing position in Toyota (4%) in the absolute-return portfolio will be doubled while a 4ppt investment will be initiated in camera maker Nikon. These investments will be paid for by removing Tokyu Corp and reducing East Japan Railway, Marubeni and Japan Prime Realty by 3ppts, 1ppt and 1ppt. · Investors measured against the Topix should now strategically position their portfolios in anticipation of extended yen weakness. · Bernanke and Geithner went before Congress last week making a plea for their legal powers to be increased to seize non-bank financial institutions. This could create a legal precedent for how to nationalise insolvent banks. The legal power for the federal government to nationalise these banks, or for the FDIC to seize them, is on shaky ground unless the government’s liquidity supports and guarantees are suddenly removed. · The financial institutions most likely to sell toxic debt to government financed distressed debt investors are those who can afford to take the haircut and survive, primarily because they have already taken significant writedowns on those securities. · India’s general election later this month has been another source of uncertainty for the Indian stock market this year beyond worries about slowing growth. The return of a Congress-led coalition would come as a relief to the stock market, though that relief would be reduced if the Communists were a coalition partner. Still, no one can dismiss outright the possibility of a shock Third-Front victory, which would be a major negative for investors. It could also destabilise the rupee given India’s chronic fiscal deficit. · As for Indonesia’s legislative election next week and presidential election in July, so far all the signs are that this will be a positive outcome for the stock market and the rupiah with the still popular Yudhoyono re-elected for another five-year term. Indeed there is even a chance that SBY could be elected without the support of Golkar. A SBY second term will secure a mandate for further reform in such areas as the civil service, the labour market and the judicial system. · The political climate is also heating up in Malaysia with the arrival of a new prime minister in power. In the absence of real reform, long-term tensions with the opposition led by Anwar are likely to grow. Still if the opposition wants to win power outright, it will probably need to do so via the electoral process rather than by parliamentary tactics. Sabah and Sarawak are the key swing areas since if the opposition coalition won this region, it would end up with a parliamentary majority. · Politics is still the central issue in Thailand with the country remaining fundamentally divided over the Thaksin factor. The position of the Democrat-led coalition government is helped for now by a seemingly secure majority in the legislature. · The present political situation in Thailand amounts to a tense stand off. While this can persist for an extended period, the key variable remains as ever the king’s health and the resulting risk of a power vacuum. There is also the added factor of a weakening economy which can only add to the underlying political tensions. The fundamentally uncertain political outlook also poses a risk to the baht. · There is growing evidence of rising transactional activity in Californian housing. GREED & fear continues to believe there is a sporting chance that the worst areas of US housing, such as California and Florida, could be bottoming out next year. The biggest risk to this view is the unintended consequences of socialistic forbearance policies proposed by the Obama administration.