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

To: carranza2 who wrote (62602)	4/8/2010 7:41:36 PM
From: TobagoJack	2 Recommendations Read Replies (2) \| Respond to of 218341

just in in-tray, per GREED and fear · Bullish sentiment has been maintained in America over the past week with a moderately positive jobs data while the concern about a row between Washington and Beijing on the exchange rate has abated with Washington’s decision to postpone issuance of a report on currency manipulation. This causes GREED & fear to continue to give the upside the benefit of the doubt in the short term. · Still in GREED & fear’s view the area to make new investments in equities globally is in Asia and other emerging markets, most particularly after the healthy consolidation seen in recent months. The obvious market to buy is China where valuations are increasingly interesting and where renminbi appreciation is likely to resume later this quarter. · The theme of the new Asia Maxima (Betting on normal, 2Q10) is that investors are increasingly betting on a normal recovery in the West. Still in GREED & fear’s view the risk to the current Wall Street-led equity rally will be the realisation, sooner or later, that the recovery is not normal. But so long as investors are “betting on normal”, there is the potential for the S&P500 and Japan to continue to outperform. · The Japanese market continues to offer a convenient hedge for those investors who believe in the long-term Asia and emerging market story, but want to hedge the risk of a healthier and more sustained recovery in the West than assumed by GREED & fear. · GREED & fear remains unconvinced about the pick up in US employment. Consumption in the US is being driven by transfer payments and tax cuts, not by income growth. Still it is also the case that next two months’ jobs data are also likely to be positive because of the Census effect. · The key fundamental point about the US economy remains the continuing lack of any compelling evidence of a pick up in the credit multiplier. And if the credit multiplier is not working that suggests that velocity of money in circulation continues to decline, which is intrinsically deflationary. · There is only evidence of a limited rebound in securitisation activity in the West. The only areas showing a convincing rebound in activity are those areas where there are forced buyers acting under government influence. · The US housing market is supported by continuing life support from Fannie Mae and Freddie Mac. There is also a new wave of mortgage interest-rate ‘resets’ about to kick in as a consequence of the former popularity of option ARMs and the like. · GREED & fear does not believe that the fundamental deflationary pressures are lifting in any meaningful way in the US. As for Euroland, there is the added negative of German-imposed fiscal constraint. · The attempts by Europe’s politicians to fudge the fundamental issue posed by Greece’s fiscal predicament, in terms of having both the European Commission and the IMF play a supervisory role, are wholly untenable. What is evident, however, is that the fiscal austerity implied by sticking to the strict rules of a German defined system is clearly massively deflationary. · GREED & fear continues to believe that it is only a matter of time before markets refocus on the healthy fundamentals of Asia where consumers have rising incomes and where governments, companies and consumers are not constrained by excess leverage. There is also the potential for currency appreciation in Asia. · The Asia ex-Japan thematic portfolio outperformed the regional index last quarter, rising by 4.0%, compared with a 1.0% gain in the MSCI AC Asia ex-Japan Index. The portfolio has risen by 524% in US-dollar terms since inception at the end of 3Q02, compared with a 184% rise in the MSCI AC Asia ex-Japan Index and a 43.4% rise in the S&P500. · The thematic portfolio for Japan marginally outperformed the Topix last quarter, rising by 8.1% in yen terms compared with a 7.8% rise in the Topix. The portfolio is now down 1% in yen terms since inception on 17 March 2005, while the Topix has declined by 17.9% over the same period. · One minor change in the Asia ex-Japan thematic portfolio has been made at the start of the new quarter. The investment in State Bank of India will be reduced by one percentage point with the money added to the existing investment in another Indian bank, Axis Bank. 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.