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

To: bull_dozer who wrote (57063)	10/29/2009 6:43:05 PM
From: TobagoJack	Read Replies (1) \| Respond to of 217792

is that a trick question? :0) just in in-tray, per GREED n fear · Stock markets have stalled over the past week. But GREED & fear would still just give the benefit of the doubt to further upside into the year end. A key technical point to watch is whether major indices hold above their 50-day exponential moving averages. While a critical data point for the market will be next Monday’s ISM report. · GREED & fear’s view remains that US consumption and employment data are not “lagging” because this remains a deleveraging cycle in the US where the fundamental evidence still points to the growing reality of a liquidity trap. The recent divergence between the US consumer confidence index and the S&P500 is yet another sign that this is not a “normal recovery”. · The US stock market is no longer cheap, most particularly as any equity correction is likely to lead to a US dollar counter-trend rally which will hit the expectations for US exporters’ earnings. Those investors who want to hedge their Asian equity exposure today should do so by shorting the S&P500. · Macro traders who want to bet against recent US stock market enthusiasm should keep a close eye on the eurodollar futures. If the S&P500 does turn around and “melts up” to the 1,200 level into year end, it can be assumed that interest rate hike expectations will increase further. But GREED & fear remains of the view that neither the Fed nor the Bank of England will raise rates at all next year, and that neither will abandon completely so-called unorthodox policies in 2010. · If policy will remain easy in the West, there will be growing talk of the need for Asian policymakers to turn pre-emptive. The Reserve Bank of India has made a pre-emptive move this week by asking the banking sector to increase its NPL coverage to 70% of gross NPLs. While this is a short term negative for Indian banks, GREED & fear would encourage genuine long-term investors to use this as an opportunity to add to positions in Indian bank stocks on the current set back in prices. · If the RBI has made its initial move, the PBOC has so far done less. Recent policy moves in China have been more a case of reducing easing rather than actual tightening. While a private sector investment cycle is gaining traction. · China equities remain GREED & fear’s favourite area to overweight in Asia this quarter. While the launching of the new Growth Enterprise Market this Friday will raise temporary supply concerns, it has to be a positive development for the China stock market as well as for the brokers who will be handling all the IPOs. · The Hong Kong authorities in recent days have started to take action in an effort to cool down perceived excesses in Hong Kong’s residential property market, most particularly the “luxury” sector. GREED & fear takes the view that such measures will not fundamentally hurt the market, though there will doubtless be an impact on sentiment. · Asian governments and central banks are going to have to be very aggressive if they really want to head off the risk of an asset bubble in an environment where Western monetary policy stays easy. But the most likely outcome at present is that Asian tightening policies will remain highly incremental. · The most important aspect of this potential Asian policy response remains Chinese currency policy. For now GREED & fear has the same view as CLSA’s China macro strategist Andy Rothman, which is that China will start to allow an incremental appreciation in mid-2010 of 5-7% per year. · GREED & fear has to applaud Bank of England Governor Mervyn King for his speech last week when he again called, albeit indirectly, for a modern version of the Glass-Steagall Act. It remains a complete outrage, given the massive losses sustained by taxpayers, that these “too big to exist” banks continue to operate in the same way as before with the benefit of government guaranteed deposits. · The pressure on the commercial gold shorts is increasing. Gold is an essential investment to hedge against the increasingly reckless policies of Western governments in their increasingly desperate efforts to preserve their fiat paper currency systems. If and when equities do correct properly and the US dollar rallies properly, investors should use the likely correction in gold as an opportunity to buy more bullion. 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.