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

To: carranza2 who wrote (61698)	3/4/2010 11:42:51 PM
From: TobagoJack	1 Recommendation Respond to of 218140

in the mean time, just in in-tray · The 1.2m temporary workers the US Census Bureau is expected to hire this year for the 2010 Census has the potential to fuel bullish sentiment in the stock market where the S&P500 still has the potential to reach GREED & fear’s 1200 target. · In GREED & fear’s view it is possible to have a few quarters of positive capex in the US given robust corporate balance sheets and the depressed nature of capex even if America still fails to kick start a releveraging cycle, which remains the base case here. The most likely area for capital spending is in the technology and software area. · The financial markets this week have reverted to assuming that Greece will be bailed out by a far from subtle off balance sheet fudge, based on press reports that a scheme has been devised whereby German banks would buy Greek bonds guaranteed by the German government. But GREED & fear cannot help but wonder if such a scheme will pass the smell test of German public opinion where opinion polls suggest ordinary Germans remain resolutely opposed to a bailout of Greece. · If Berlin does opt for such a blatant off balance sheet bailout it will undermine fundamentally the creditability of the euro and of Euroland in general. Speculators should look to sell the currency on any bounce prompted by initial relief caused by the announcement of a deal and the apparent solving of the European sovereign debt crisis. · The trading of sovereign CDS has now become a cause celebre amongst European officialdom annoyed as they are over the recent speculative attack on Greece. GREED & fear agrees with those who argue for a ban on naked trading of such CDS if there is not a legitimate commercial relationship to hedge against. The CDS market was a major aggravating factor in the credit crisis in terms of encouraging leveraged naked speculation. · In GREED & fear’s view what is needed in America to reform the practices that helped cause the credit crisis is nothing less than a modern form of the 1933 Glass-Steagall Act where banks would be completely banned from engaging in risky trading activities if they take government guaranteed deposits. · GREED & fear would continue to advise investors who want to hedge their long Asian equity exposure to remain short Western financial stocks. Still GREED & fear no longer recommends that Australian financials form a part of the hedge. This is because there is too big a risk that Australian banks become leveraged to the anticipated Asian asset bubble. · The debt burden is, for now, less of a problem in Australia than it is in Britain or America. This is because the Australian consumer is not psychologically risk averse at present because he feels himself or herself geared to the world’s best economic story, namely China. · It will become important in coming quarters and years whether the Australian central bank targets CPI or asset bubbles in the conduct of its monetary policy. By encouraging first-time home buyers over the past year, the present government has all but ensured that Australia will have its own subprime mortgage crisis at some point in the future. · The major negative headwind for Asia and other emerging markets so far this year has been the stronger US dollar and the China tightening cycle. This is why the Chinese property and banking sectors are the key areas for investors to focus on in Asia for a signal that the tightening cycle has been discounted and that China and other emerging markets can begin to trend higher. · The investment in Chinese retailer Gome in the Asia ex-Japan long-only thematic portfolio will be replaced by an investment in property-heavy Hong Kong conglomerate Swire Pacific. As for the relative-return portfolio, 1ppt will be added to Thailand with the money taken from Malaysia. · Last Friday’s judgment on the Thaksin case has the potential at least to stabilise the political situation for a while. Still GREED & fear is far from convinced that all is clear in Thai politics given the continuing deep divisions in Thai society. The investment case for Thailand is clearly its relative value in the Asian context and the improving economic data. 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.