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

To: carranza2 who wrote (68316)	11/18/2010 12:13:07 PM
From: Cogito Ergo Sum	Respond to of 219532

making toilet paper squares smaller Doesn't matter to most kids... they always take enough to make giant handle LOL

To: carranza2 who wrote (68316)	11/18/2010 5:43:35 PM
From: TobagoJack	Respond to of 219532

just in in-tray, greed n fear Risk is suddenly “off” again. Many in the long-short absolute-return investment community were still running low risk positions going into September. As “risk” was piled on in the proceeding two months in the run up to QE2, there is a natural desire to lock in any profit outstanding on any hint of weakness. This end-of-year dynamic clearly creates the potential for more of a correction. The latest China inflation/tightening scare remains primarily a food inflation story. Still the political sensitivity of food means the PRC is taking action. Such measures have put a policy risk on the commodity stocks in the same that the policy risk has capped the Chinese property stocks over the past year and more. Still GREED & fear would use this correction to add to positions in Chinese bank and insurance stocks which would seem to be the beneficiaries of higher interest rates in China. As for monetary tightening in China it is important to remember that the key tightening measure in the command economy system is the loan growth quota. The last time inflation and interest rates went up in 2007, the A share market rose as its focus was then on the positive of a stronger economy. With the Chinese property market still the subject of government cooling down measures, it will be interesting to see if the same dynamic takes hold this time. There is certainly the domestic liquidity to fuel a stock market move. The concerns on India are all tactical, namely that foreign investors have led the market in recent months and that locals have pulled back. A correction or pause from current levels would actually be quite healthy for the Indian market. With food prices having been benign in recent months in India, there is clearly a risk to the relatively sanguine view on inflation if the non-food component of inflation remains structurally higher than expected in coming months. It cannot be assumed that the RBI tightening cycle is over, though for now at least the Indian central bank has indicated it is on pause. On the long-term macro story, there is the potential for the Indian savings rate to rise from around 33% at present to above 40% in coming years. Such a dynamic if it occurs will clearly reduce the dependence on foreign capital to fuel the infrastructure investment required. For now India’s energy subsidies still pose a hostage to fortune to the overall macroeconomic story. It remains the case that the Indian market will be vulnerable to a renewed QE2 driven surge in the oil price to US$90/bbl and higher. For this will risk setting up the dynamic of a weakening currency fuelled by a rising fiscal deficit in the context of India’s continuing current account deficit. Still in the absence of such an oil spike, India’s fiscal situation remains manageable while its current account deficit should continue to be viewed as the natural consequence of a domestic demand driven economy. With direct tax reform in the pipeline as well as the likely introduction sooner or later of a goods and services tax, there is the potential for significant improvement in the collection of revenue going forward. The other issue that has continued to make investors nervous over the past week has been ongoing Euroland sovereign debt concerns now focusing on Ireland. GREED & fear’s bet is that another bailout fudge will be agreed upon causing temporary relief. But any such fudge will further antagonise German voters and taxpayers. Even if the Irish issue is temporarily dealt with “satisfactorily”, attention will turn sooner or later to Portugal which will also need a restructuring. Then there is Spain where a funding crisis will likely be a late 2011 story, if not earlier. The relatively sanguine mood in America will likely be enhanced by a successful listing of the new General Motors which has been marketed as an emerging market play. But the biggest positive point for GREED & fear is that GM has been granted by the federal government the right to carry forward tax losses of US$45bn, a privilege not normally allowed after bankruptcy. This government gift will be a huge positive if the new GM succeeds in making money. In the current post-financial crisis environment key decisions for investors are being made in Washington, just as in the original GM bankruptcy bondholders suffered as a result of arbitrary decisions also made in Washington. Existing strong players will continue to dominate the booming Indian auto market. However, to maintain momentum, the major players will have to increase capacity meaning there will be a capex story related to the auto sector. The industry’s focus will remain on domestic growth, still focused on small cars, as well as expanding India’s already established role as a global production centre for the export of small cars. 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.