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

To: Snowshoe who wrote (64047)	6/2/2010 2:37:40 AM
From: TobagoJack	Respond to of 219713

recommendation to plug bp well youtube.com from russia, with love

To: Snowshoe who wrote (64047)	6/3/2010 9:49:40 AM
From: TobagoJack	2 Recommendations Read Replies (3) \| Respond to of 219713

just in in-tray, per GREED and fear · There is zero evidence that the European crisis has reached its nadir. Rather the stress test for whether Europe can take austerity lies in the future not the past with Spain the key country to focus on in the short term. · The ruling Socialist Party will find it tough to pass a 2011 budget in coming months. Still the issue of who is running Spain is much less important than the nature of the coming downturn since all political parties will have to confront the same deflationary reality. · The massive private sector debt accumulation in Spain is the mirror image of the gargantuan current account deficit Spain has run in recent years. It is the sheer level of private sector debt which makes Spain so vulnerable to deleveraging and the related phenomenon of debt deflation. · The ECB is a long way from committing itself to full-scale quantitative easing. Such a policy will only occur after a further collapse in stock markets and a further rise in credit spreads. GREED & fear still finds it hard to believe that budgetary discipline can be enforced in the Euroland unless there is a clear exit mechanism established for those countries which break the rules. · For now at least the financial markets are far more concerned about fiscal policy in Europe than politics. And for now this region remains the most likely trigger of macro shocks for world markets since the risk of an Asian Crisis-style crisis of contagion in Euroland cannot be ruled out completely. · GREED & fear is going to use the period of relative calm to recommend a Spanish flu trade. This is to bet on rising Spanish CDS. The main risk here is that the authorities ban the trading of CDS. It also continues to be recommended that the Asia ex-Japan long-only portfolio should be hedged by maintaining a short position in European financial stocks. · A key issue for investors remains whether the S&P500 had fully discounted the present IT-centered capex cycle when it peaked at 1217 on 23 April. If this is not a “normal” recovery in America, where bank lending, consumption, employment and income all recover in a healthy fashion, then it becomes very important to know when the present capex cycle is fully discounted. GREED & fear certainly has no belief in the staying power of the recent recovery in US consumption. · There remains a continuing lack of evidence in America of a pick up in credit growth at the macro-economic level. GREED & fear remains highly sceptical whether securitisation will return anytime soon in anything like its old form. This is both because of a continuing lack of demand for credit and also because the current regulatory initiatives to control securitisation will make the securitised debt peddler’s trade both less profitable and more risky. · The US housing downturn has not ended despite rising hopes to the contrary in recent months. Rather investors should prepare for renewed disappointing data in coming months with the end of the first-time homebuyer tax credit at the end of April. There also remains no convincing evidence that foreclosures have peaked. · GREED & fear remains fundamentally comfortable with the Indonesian macro story. Still the stock market remains tactically vulnerable given the Euroland turbulence and the continuing tightening in China. A further correction in Indonesia is to be expected with the greatest area of potential downside in the commodity related stocks. · The rupiah’s comparative stability so far this year can be explained by Indonesia’s healthy fiscal position and also by the growing comfort of Indonesian Chinese with the domestic political situation following the re-election of President Yudhoyono to a second term last year. · The macro story in Indonesia continues to improve with real GDP growth of around 6.5% likely this year. The one area in Indonesia which continues to disappoint is infrastructure. It is this bottleneck which is preventing Indonesia from growing at the 8% plus it would otherwise be capable of. · GREED & fear will maintain the overweight in Indonesia in the relative-return portfolio. Investors should use the current corrective phase to build positions in the core domestic sectors which GREED & fear would continue to favour; most particularly cement and financial services. Indonesia has by far the most profitable banking sector in Asia. · The resignation yesterday of Japanese Prime Minister Yukio Hatoyama is a sad end to the hopes raised by the DPJ’s landslide electoral victory last August. But the departure of Ichiro Ozawa means that the DPJ might do less badly than would otherwise have been the case in the Upper House election due to be held in July. Japan continues to inch painfully slowly towards a long overdue political realignment. 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.