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

To: No Mo Mo who wrote (60669)	2/5/2010 1:39:50 AM
From: TobagoJack	Respond to of 217938

just in in-tray, per GREED n fear Wall Street was not so excited about the 4Q09 US GDP data since 59% of the GDP growth was contributed by the change in inventories. Still there was one fundamentally positive aspect to the data This was the first sign of a capex recovery. For such reasons GREED & fear thinks it is risky to assume that hopes of a cyclical recovery in the US have already peaked. · There is in GREED & fear’s view now room for US monetary tightening expectations to rise again as they have, of late, just collapsed. GREED & fear would recommend owners of Asian and emerging market domestic equities to hedge their exposure at this juncture by shorting fed fund futures. · GREED & fear’s base case remains that the recovery in the US is not normal and that renewed cyclical hopes, if they occur, will be dashed sooner or later by investors refocusing on the fundamental deflationary condition of America and indeed the rest of the West’s highly indebted economies. · In Euroland the European Commission seems anxious to impose its own conditions on Greece for a return to fiscal health rather than ask the IMF to do it. If this approach works it will clearly increase the credibility of the Euro and indeed of the Euroland area in general. Still this is a big if because if such an approach does not work then the credibility is shattered. · A potential flashpoint for investors to keep in mind is a general strike in Greece which has been called for 24 February. The other point is the massive deflationary pressures implied by the fiscal austerity being imposed on the likes of not just Greece but also Spain, Portugal and France assuming that the proposed fiscal austerity plans are actually implemented by the relevant national governments. · For GREED & fear the Davos proposal of a global tax on banks to raise revenue for any future bank failures would only deal with the symptom, not the core of the problem, which is the ability of financial institutions to engage in intrinsically risky leveraged activities funded by government guaranteed bank deposits. The only Western central bank governor who seems to “get” this is Bank of England Governor Mervyn King. · GREED & fear continues to believe that the AIG-New York Fed affair remains the most likely potential “smoking gun”, which could turn out to have nasty consequences, most particularly for owners of Western financial stocks. In GREED & fear’s view the political dynamics are now changing with the critical watershed event likely to prove to be the Obama policy announcement on financial reform on 21 January. · The Davos proposal of a global tax or levy on banks also raises the issue of why it should be global. GREED & fear sees no reason why Chinese and Indian banks should have to pay this levy because banking systems in these countries did not engage in securitisation run amok, and so did not have to be bailed out. · The past week has seen the release of data highlighting the deflationary trend in Japan. The Bank of Japan may be hoping for a pick-up in external demand. But the recent data highlights the danger if end demand does not recover as much as anticipated, and if the yen stays strong. · The 10-year JGB is now 93bps above the low in yield reached in 2003. Yet the deflationary conditions are worse now than then, indicating perhaps that the dramatic fiscal deterioration of the past year is causing Japanese investors to think twice before further adding to their JGB exposure. The other issue is the extent to which there will be continuing demand for JGBs from the postal savings system. · There is imminent election fever in the Philippines. The presidential election campaign only formally commences next week but unofficially it began last year with leading candidate Manuel Villar outspending the other leading candidate Noynoy Aquino in recent months by a factor of nearly ten to one. · The spending is paying off with the latest opinion polls showing Villar and Aquino running nearly neck-and-neck. It will be interesting to see if either leading candidate pulls ahead decisively though for now the momentum is clearly with Villar. From a stock market standpoint, the key pre-requisite is that one candidate wins decisively. · The phenomenal resilience of the trend in overseas Filipino Workers remittances was demonstrated last year with the stress test provided by the global slowdown. This remains the main driver of the Philippine economy. · The other promising area is the BPO business where the focus is increasingly on business services outsourcing rather than call centres. With deflationary pressures likely to persist in the West, and with therefore the focus on cost control likely to be maintained, this is now an area where the Philippines has a real advantage with its large supply of qualified graduates who can read and write English. · The Philippine stock market is not expensive. It also has the defensive merit of having been one of the few emerging markets globally to see net foreign selling last year. This reflects the fact that it remains off limits for many foreign institutions on account of the lack of liquidity. For those with the liquidity flexibility, GREED & fear’s view is that the Philippines should not be ignored. · The consumption trend in the Philippines remains robust, thanks to the remittances, and should receive a further boost in coming months from election spending. A potential catalyst for the property sector could also come from recently passed REIT legislation, though the launch of any REIT is likely to be delayed until after the election. · With plentiful excess liquidity in the banking system, there is the potential for the Philippines to have an asset bubble just like the rest of Asia. For now bank lending remains relatively lacklustre. This reflects the natural caution of family controlled banks which do not assume they will be bailed out by taxpayers. But if the election passes smoothly, credit growth should pick up along with the economy. 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