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

To: Canuck Dave who wrote (49746)	5/7/2009 5:39:41 PM
From: TobagoJack	1 Recommendation Read Replies (1) \| Respond to of 217792

just in in-tray, fear and GREED watch n brief · GREED & fear would still give the relief rally the benefit of the doubt in the sense that it should have further to run. CLSA’s technical analyst Laurence Balanco’s target for the MSCI AC Asia ex-Japan index is 393-418. The index closed on Wednesday at 360. Still, the present Wall Street-correlated global equity rally is still viewed as a bear-market rally in the context of a secular bear market. · Balanco’s target for the S&P500 in this rally is 944–1,025. This seems quite plausible and dovetails with GREED & fear’s own guesstimate of the potential of a S&P500 return to a maximum of 1,050 first made, too prematurely, back in January. Still if GREED & fear was too early to call for the potential of a relief rally in the context of the S&P500, this was much less the case for Asia. The MSCI Asia ex-Japan and Emerging Markets indices bottomed in October and have been outperforming ever since. · GREED & fear’s long-held view is that the main beneficiary of the massive monetary easing instigated by Western central banks to combat the “credit crunch” will be the Asian and emerging market asset-reflation story. For this story has no structural domestic constraint to restrain it while the collapse in borrowing costs regionally can only serve as a dramatic following wind for local asset price reflation. · The only reason for unleveraged Asians not to take advantage of the present ultra low borrowing costs is risk aversion stemming from the much publicised problems in the West. Still, Asians should now be expected to focus more on their own domestic asset markets, be it property or equities, after their disastrous experience searching for yield buying Western created structured finance products. · After a year where global sentiment on Asia has swung from belief in Asian decoupling to belief in Asia as a 100% correlated train wreck with the US consumer, GREED & fear still believes in a via media between these two extremes. That is “incremental decoupling”. · The process of the US bank stress tests is likely to amount to what has been well described in the press as “reverse engineering”. This is that the government will decide what it wants to achieve and work the numbers back accordingly. · With the stress test over, the attention will soon return to the PPIP. Here GREED & fear’s view is still that if there is to be any traction from the program, it is most likely to come from the successful sale of securities rather than loans. Still, the real issue for the credit markets is whether securitisation can be re-activated. GREED & fear remains a sceptic on this. But there is no doubt that this is what Billyboy is determined to achieve. · If Asian asset reflation is a key area in which to be playing this rally, investors should also not forget Japanese real estate given the incredibly high rental yields now available on Japanese physical property. Investors should now be positioned for more of a rally in Japanese real estate stocks. The obvious high beta area to play here are the J-Reits where government policy has now turned supportive. · J-Reit Japan Real Estate will be added to the Japanese thematic portfolio this week, replacing KDDI Corp. · GREED & fear continues to advise macro investors to short the yen and the JGB. Aside from shorting the yen against other major currencies, investors should also short the yen against the NT dollar given that “Capital Links” is no longer just a theory. · Mainland visitors to Taiwan are now running at close to 3,000 visitors a day. Investors should understand that if ordinary mainland Chinese do not want to visit Taiwan, they will be ordered to do so if it fits the political agenda of the PRC. And right now Beijing’s agenda is to make Capital Links a reality. · There has been further evidence this week that China policy is gaining traction. CLSA’s China PMI rose by a record 5.2 points to 50.1 in April, signalling an expansion in manufacturing activity for the first time since July 2008. While residential apartment sales in major Chinese cities continue to rise. CLSA CLEAN & GREEN: Please consider our environment before printing this email. The content of this communication is subject to CLSA Legal and Regulatory Notices These can be viewed at clsa.com or sent to you upon request.