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

To: carranza2 who wrote (60300)	1/22/2010 11:50:54 AM
From: Cogito Ergo Sum	Respond to of 217619

Yes, let's see as that's now resistance.. Not buying here.. I'm enjoying the peace of mind.. Not selling at losses gives one a chance for some rational thought :O)...

To: carranza2 who wrote (60300)	1/23/2010 3:41:11 AM
From: TobagoJack	1 Recommendation Read Replies (2) \| Respond to of 217619

just in in-tray <<This was passed on from a friend of mine. Take it for what it's worth. xyz Economist and NYU professor Nouriel Roubini spoke at an event in HK last night. Below is my summary of his comments. Pardon the length. CHINA Growing too fast/creating excess capacity and government will not tighten fast enough. Growth has been created by cheaply-financed enterprises and infrastructure spending which is not sustainable (i.e. US depression after WWI). China has 84 automakers vs. three in the US. Government is trying to reduce by requiring approval for establishment of new businesses but this is not enough. The domestic market does not consume enough for structural reasons as a lack of social safety net causes high savings rate. This policy mistake by the government has created 10%+ growth, ~1.5% rates, and rising inflation - all will have severe negative consequences in later years. They may let the RMB rise before G20 meeting [presumably in Nov. ’10] as a small offering to the western world but only expect 3-4% appreciation per year. The western world has little leverage with China and they will continue to work for their own interests. China cannot not be a driver of growth for entire world yet, but it can be for Asia. Major issue for global economy is that countries that have historically overspent (mainly US) have now moved into a phase of saving as part of de-leveraging process. China and countries that historically over-saved, will not spend enough (for reasons mentioned above) to make up for the drop in consumption. UNITED STATES Expect U-shape recovery. For 2010, US will see further growth in the first half. This will not be sustainable to the extent that stimulus programs and huge wall of liquidity will support economic data and financial markets. Unemployment will also send a false message as hiring of 700K people for 2010 census is short-term. Risky assets should outperform (equities over credit) during first half. Dollar will rebound on this perceived economic recovery, but look for it to reverse course in the 2H as stimulus effects wear off and unemployment grows. There is also risk that US politicians will embark on further spending (increase budget deficit) ahead of Congressional elections. Exit strategies are “darned if you do and darned if you don’t”. If you exit too soon, there is risk of another Japan-like situation where growth is hampered by pre-mature tightening, etc. If you exit too late, there are substantial problems with balance sheets and higher expected inflation. US will likely err on the side of exiting too late. Inflation is a longer-term problem, but deflation is a realistic concern now because of growing unemployment, falling wages, and prices cuts (as a means to reduce inventories). Corporate earnings are at risk despite low point in inventory cycle. Recent outperformance in earnings has come from cost-cutting, but it will be challenging to grow top-line when consumers are still de-leveraging. EUROPE/JAPAN Roubini barely mentioned Japan and when he did it was lumped together with Europe as regions that he is particularly concerned about. Parts of Europe have a competitiveness problems as labor-intensive jobs in Spain, Italy, and Greece have been moved to China as a result of rising EUR. Japan will have similar problems with a strong currency. Making matters worse, many of the European countries were facing a significant budget deficit before the crisis. UK looks the most likely country to exit fiscal stimulus too early as they actually did not ease policy as much as the rest of the world. In response to a direct question, Roubini said there is a small chance (approx. 20%) that some countries will leave the EU, but this would not happen for some time to come. EMERGING MARKETS He was most positive on this group in the near term. EM will see a V-shape recovery as consumers were not as leveraged as developed markets and infrastructure spending will increase. Growth will average 7% in these countries, but this is the start of another bubble as credit will become more available and therefore weaken currently strong corporate balance sheets.>>