Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: energyplay who wrote (60475)	1/28/2010 5:58:45 PM
From: TobagoJack	Respond to of 217650

as long as hk keeps its laws, maintain freedom from taxes, liberty of capital flow, and sustain one dollar one vote, one pair of legs, two votes, should be ok longer than shorter in the mean time, just in in-tray · It is still not clear to GREED & fear whether Obama’s policy announcement on financial reform last week was the catalyst to mark the first decent correction in US equities since the bottom reached in March last year. Over the past week the stock market has stopped ignoring bad news. Still GREED & fear would like to wait for the reaction to what is likely to be strong 4Q09 GDP data on Friday to get a better gauge of the market mood. · Time will be running out for those who believe it is a normal recovery if unemployment is not improving by the middle of this year, and if there is by then still no convincing evidence of re-leveraging. The moment the Washington consensus gives up hope of a normal job generating recovery, the focus will immediately return to the need for another stimulus package. · The Fed’s plan to halt the purchase of mortgage-backed securities at the end of March remains a potential negative headwind. GREED & fear would be surprised if the Fed really stops buying this stuff for an extended period. The Fed is also unlikely to contemplate raising rates until it has successfully exited these unorthodox policies. GREED & fear’s base case remains that the Fed will not raise interest rates during 2010. · It would seem very unlikely that Ben Bernanke will not be re-nominated as Fed chairman at this stage because the politicians would be risking a market crash. In political terms Bernanke is also not at the centre of the storm on taxpayer bailouts. That unfortunate position falls to Treasury Secretary Timothy Geithner. · The New York Fed is now being investigated on the AIG bailout by the Special Inspector General for the TARP. It is this AIG affair which remains the nearest thing to a “smoking gun” in the continuing smouldering political storm over bailouts, bonuses and the like. · GREED & fear continues to believe that the new regulatory drive in the US will prove to be a long-term bearish reality for the obviously targeted financial institutions. The Obama proposals are focused on the core issue politically. That is devising a system that will make it hopefully impossible for taxpayers to have to bailout again an institution engaged in obviously risky leveraged activities just because it is taking federally insured deposits. · If America does enforce some version of what Volcker is recommending other countries where banks have been bailed out by taxpayers will likely have to follow. This is because opposition political parties will jump on the issue as they will know it will get political traction. This risk does not apply to Asian banks precisely because there was no need for taxpayer bailouts during the credit crisis. · There has been more deafening noise this week about China “tightening”. GREED & fear’s view remains that this tightening noise represents a speed bump in a bull market, and that investors with a view extending beyond two months should view this as an opportunity to buy more interest rate sensitives in China, most particularly property stocks and bank stocks. · There is also growing talk of a slowdown or “collapse” in residential property sales this month in the mainland. GREED & fear suspects this is overdone. A moderation in sales is both understandable and also to be expected. The government wants to see a cooling off of the property market, in terms of asset prices rising, without causing a collapse in activity, since a continuing residential property development cycle is one of the key ways the PRC wants to drive economic growth this year. · If activity does slow more dramatically than the government would like to see, stock market neurosis about tightening will suddenly switch to neurosis about weakening growth in China with resulting negative fallout for commodity prices and related equities. Still in such circumstances it will only be a matter of time before Beijing reverses policy given the role expected to be played by the residential property development cycle in meeting the desired 8% plus growth target in 2010. · The past week has seen the yen move back marginally below 90, driven by renewed risk aversion but also by disappointment at the lack of new policy initiatives stemming from this week’s Bank of Japan monetary policy meeting. Those positioned for a weaker yen and a higher Topix want to see concrete action taken by the BoJ to expand its balance sheet. It may take a yen move back towards the 85 level reached last year to force a more aggressive policy response. · The Singapore residential property market cooled down in 4Q09 after the sharp rebound in prices seen earlier in the year. The government has been talking down the mass residential market in recent months and has followed up its rhetoric about “affordability” with concrete actions in terms of increasing supply. · The past week saw the potential catalyst of the opening of Genting’s Resorts World at Sentosa in what marks the official opening of Singapore’s much anticipated US$10bn Integrated Resort project. This project is not just a big potential positive for the residential property market. The direct and indirect benefits of the integrated resort project for the Singapore economy are also hard to exaggerate. · The positive immigration dynamic in Singapore is important given the still declining local birth rate. Still immigration is a sensitive issue politically give local grievances about downward pressure on basic wages which is why Prime Minster Lee Hsien Loong said this week that Singapore could not rely solely on foreigners to sustain its population. · The future of Singapore is increasingly as a services centre and especially as a private banking centre, and less as a manufacturing centre. In GREED & fear’s view the long term implication of this remains a much stronger Singapore dollar which can increasingly be used as a reference currency of choice for private banking clients. This implies that sooner or later the Monetary Authority of Singapore will have to stop targeting the exchange rate against a basket of currencies. 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.