Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: 2MAR$ who wrote (74137)	5/12/2011 7:38:05 AM
From: Chas.	Read Replies (2) \| Respond to of 219823

I made a few comments regards the referenced retired professor from UC Berkly and the remarks are true and simply reflect his outlook on Global GeoPolitics and Oil.... OTOH YOU have lashed out and sunk to the level of a Personal attack on Me....... how silly, how childish, how typical of a Left Wing Liberal that see their POV only... Chas

To: 2MAR$ who wrote (74137)	5/12/2011 7:06:32 PM
From: TobagoJack	Respond to of 219823

am in beijing. have on good enough authority that (i) the company they run, a bulge bracket state-owned holding company, is exiting usa t-papers, and shall deploy to emerging mkt resource, banking, and real estate plays (they have been investing for some time already in australia and canadian resource plays) (ii) perhaps other such state companies have gotten the words (iii) possibly the private companies would get whiff of wind at some juncture (iv) maybe the sovereign fund would play rearguard until all government and civilian entities are cleared out, away, and safe let us watch n brief, for it may well be nearly time for "operation exodus" in the mean time, just in in-tray, per greed n fear GREED & fear – Euroland’s panic potential, 12 May 2011 · Euroland politicians continue to dither. The longer this dithering continues, the bigger the risk that global markets face a Lehman-style global liquidity panic precipitated by a Euroland crisis. Such a panic would lead to a sharp US dollar rally as the dollar carry trade is unwound abruptly. · Surging Greek bond yields are making it increasingly impossible to believe that Greek debt restructuring can be postponed until 2013 as the Euroland establishment appears to want. This means that losses will have to be taken not only by taxpayers of the core but also by shareholders in European banks and also by the ECB. · GREED & fear still believes the best macro trade on Euroland is what can be termed the "core infection" trade. This is betting on rising German and French CDS, though GREED & fear would also maintain the bet on rising Spanish CDS. · Markets continue to assume that the core of Euroland led by Germany will move in due course to accept the principle of collective responsibility. But the potential for a classic market liquidity panic exists if investors start to question this assumption. The issue right now is whether it will require a much bigger bout of market risk aversion to move Frau Merkel in this direction. · One approach which has evidently been looked at, in terms of dealing with the PIGS, is a Euroland equivalent of a Latin American-style Brady Plan in terms of a proposed extension of debt maturities. Still the political problem with such a Brady-like approach in the context of Euroland is that the extended debt would have to be guaranteed by Euroland’s core which requires in practice Germany’s political acceptance of collective fiscal responsibility for the periphery's debt. · GREED & fear’s recommendation remains that those who want to hedge the long-only Asia ex-Japan portfolio should continue to do so by shorting European financial stocks. GREED & fear also continues to believe that the ECB will not be raising rates again in this tightening cycle. · This week’s China inflation data has not undermined the mainland government’s central base case that inflation will peak this quarter. GREED & fear continues to take the view that investor sentiment on China is vulnerable to a schizophrenic mood swing in coming months, in terms of markets switching from worrying about inflation to worrying about the opposite, namely hard landings and the like. · Such a possible mood swing is another threat to the commodity trade and the associated US dollar carry trade, though in GREED & fear’s view the swing to risk aversion will be nothing like as traumatic as one precipitated by a liquidity panic over the Euroland periphery issue. · The lending squeeze in China is hitting the private sector hardest which is only to be expected since it does not on the whole have access to officially priced credit. Still fixed asset investment data remains robust helped by the ongoing social housing programme and the infrastructure build out in the interior of the country. China remains an investment addicted economy. The cement sector and the construction machinery sector remain policy supported areas that equity investors should own. · Credit is not as easy to obtain in China as it was last year. This is reflected in a growing surge in dollar borrowing by Chinese corporates offshore, most notably the property sector. This is a trend worth monitoring. · The view that the renminbi is a one way trade is causing an all too predictable stampede into renminbi deposits in Hong Kong. This reflects the new game in town of Hong Kong becoming the centre of trading in offshore renminbi products. A potential longer term issue is that the Hong Kong banks may face a liquidity shortage in terms of Hong Kong dollars. There is also the potential for a growing currency mismatch if banks are increasingly taking in renminbi deposits but can only lend out Hong Kong dollar or US dollars. · The perception that the pegged Hong Kong dollar is artificially cheap is likely to lead to continuing upward pressure on Hong Kong asset prices. Still upward price momentum in residential property has stalled which is why GREED & fear expects speculative liquidity to continue to move into the commercial property and retail property sectors where there has so far been a lack of government interference. · If the dollar carry trade has been the main vehicle propelling risk asset prices higher in recent months, it follows that the central factor for now determining whether risk assets globally are rising or falling is the action in the US dollar. For now GREED & fear will give the recent dollar bounce the benefit of the doubt. · Investors should also keep an eye out for a potential new funding source for risk assets in terms of a possible resumption of the yen carry trade. This can happen if the Bank of Japan responds to the growing political pressure, post earthquake, for more aggressive direct monetisation of government debt. Still it remains for now unlikely that BoJ Governor Shirakawa is going to respond to the growing political clamour for aggressive direct central bank monetisation of government debt. · The RBI’s practice of targeting WPI core inflation rather than targeting a consumer price index means the Indian central bank is only focusing on input price pressures rather than the ultimate pass through price pressures at the consumer level. This means the RBI urgently needs to come up with a credible consumer price data series to ease the task of managing monetary policy. · The RBI’s task will be made a lot easier if the world is hit by a Euroland-driven surge in risk aversion causing a sharp further sell-off in commodities and a related spike in the US dollar. Absent that, and a continuing rise in commodities, and the clear risk is that the RBI now tightens more than it would really need to if it was targeting consumer price inflation trends rather than input prices. 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.