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

To: carranza2 who wrote (63737)	5/20/2010 9:57:38 AM
From: Secret_Agent_Man	Read Replies (1) \| Respond to of 218050

op ex games there were 5K calls @1200 and some 18K between 1150-1200 expire on tuesday, always happens leading up to opex

To: carranza2 who wrote (63737)	5/20/2010 5:10:09 PM
From: TobagoJack	Read Replies (1) \| Respond to of 218050

yeup, and so the sum total of my fears say ... to home currency and to all things solid, and all unleveraged, at least going to zero is not a possibility. in the mean time, just in in-tray,per GREED n fear · The financial markets’ bearish reaction to Germany’s surprise announcement banning naked short selling of financial stocks and short selling in the CDS market is an indication of the strength of current bearish sentiment. · Last week’s unconvincing rally, in terms of both pricing and breath, has increased the chances of the first major correction since the late 2008 / early 2009 lows. The negative price action since late last summer in Chinese A shares and Hong Kong listed Chinese property stocks looks more and more like the key lead indicator for the global risk trade. · GREED & fear has no great clarity as to exactly when the current tightening cycle in China will end. But it would appear that interest rates have to be raised at least once. It is also the case that the PRC leadership will want to see official confirmation that both residential property transactions and residential property prices are falling. · For now GREED & fear will operate on the assumption that a change in the policy signal is unlikely until towards the end of the third quarter at the very earliest since interest rates have not been raised yet and the burst of measures only hit the property market from the second half of April. The most plausible event that could trigger an earlier U-turn on policy would be a complete blow up in Europe which would reactivate the PRC leadership’s concerns about the external environment. · Financial markets are already on the way to discounting a looming policy-driven China growth scare. This can be seen in the fact that the weakness is no longer only confined to the policy-driven Chinese property and bank stocks but also has extended to the commodity cycle trade globally. · Asia Pacific investors should maintain a big underweight position in Australia where both the currency and equities can correct further. The Australian dollar remains the most convenient liquid hedge for those investors who want to hedge Asian equity holdings. · Residential property transaction activity continues to decline in China, but it will take time for prices to follow. This latest downturn has been induced by the Chinese Government and when the green light is turned on again, whenever that may be, all the empirical evidence suggests that this will translate into renewed pent up demand for residential properties. · The PRC leadership is inadvertently contributing to the bubble dynamic since, by squeezing the market, it reduces the incentive for developers to develop which means that the supply of units is less than what it needs to be to cater for demand when the policy is reversed. · If Beijing wants to fulfill its social, economic and political objectives, then it needs to follow through on its growing talk in recent years about social housing by developing a policy towards low-income housing at the national level. It could be a copy of the subsidised housing scheme introduced in Brazil last year whereby private sector developers are incentivised to build this form of housing. · GREED & fear’s guess is that for now the potential “worst case” bottom for the A share market could be around the 2,300 level on the Shanghai Composite Index. This assumes a “soft landing” of a 25-30% decline in residential property prices which is then followed by a resumption in transaction activity as buyers are attracted by lower prices. In this respect GREED & fear is assuming, as was the case in late 2008, that A shares should bottom first, prior to the H share market. · The PRC is still likely to resume incremental appreciation of the renminbi at some point this quarter. True, the recent sharp appreciation of the renminbi against the euro is a reason to delay. But in GREED & fear’s view the domestic tightening agenda, as well as the obvious practical consideration not to antagonise America ahead of the mid-term Congressional elections in November, both argue for a resumption of incremental renminbi appreciation against the US dollar. · GREED & fear remains underweight the Australian commodity stocks while also maintaining a zero weighting in Australian financials whose highly leveraged business models look increasingly vulnerable to regulatory risk. · The fundamental trend in the West remains profoundly deflationary. True, inflation rates have been trending up since 4Q09 primarily as a result of the base effect given the collapse in commodity prices which occurred in 2H08 and early 2009. Still this base effect should start reversing in coming months. · This will be bearish for Western equities, most particularly for domestic demand stocks, since it will re-awaken deflationary concerns. However, it will be bullish for Asian and other emerging market domestic equities since it will mean a decline in currently exaggerated inflationary concerns. · The deflationary pattern in the West is perhaps most clear in the example of Ireland. If Ireland is leading the way into deflation others in Euroland will surely follow. GREED & fear would recommend investors keep a close eye on Spain which has potentially a huge deflationary cycle to endure given the level of consumer leverage and given the degree of anticipated fiscal tightening. · The deflationary backdrop in America means that, should releveraging continue not to occur in America, markets may face worryingly low nominal GDP growth in America going into 2011. Such an outcome will mean that Ben Bernanke will continue to keep interest rates at zero while there will be significant potential for a further flattening of the yield curve as long term bond yields decline. · On the fiscal front GREED & fear continues to believe that the trail of destruction – in terms of the road map to the end game which is a systemic crisis of government debt in the West – will be first Euroland, then Japan and finally America. · The new political arrangement in Britain, in terms of the first coalition government since 1945, increases the chances that the new government implements meaningful fiscal austerity quickly. The political logic argues to cut as quickly as possible, since the need for austerity can be blamed on the mess bequeathed by the previous government. For this reason sterling may be worth a contrarian punt. Still from a global standpoint Britain is a sideshow relative to the grim dynamics unfolding in Euroland. · The financial markets will remain ultra sensitive to any indication of opposition on the street to the latest fiscal austerity measures announced in Euroland, as well as to any hints of political rifts within Euroland. The deflationary pressures unleashed by these policies are formidable. · Investments will be initiated in Softbank and SMFG in the Japanese long-only portfolio with four percentage points each. One percentage point will also be added to each of Yahoo Japan and Fast Retailing. This will be paid for by removing the investments in the two J-Reits, Japan Prime Realty and Japan Real Estate, and the oil exploration company Inpex. Please consider the 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.