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

To: carranza2 who wrote (75550)	6/23/2011 7:40:02 PM
From: TobagoJack	1 Recommendation Read Replies (1) \| Respond to of 217661

just in in-tray, per greed n fear · Risk assets have to fall further before Ben Bernanke can do what he wants to do anyway. That is more quanto easing. GREED & fear’s guess remains that the next step might include trying to fix interest rates higher up the yield curve. · One technical problem for the Fed is that core CPI inflation is rising because rents are rising. The one segment of the American housing market GREED & fear is long-term bullish on is rental housing. This is because Americans will now want to rent not buy, as they are fast learning to appreciate the flexibility that comes with not being trapped in negative equity. · Renewed signs that velocity is beginning to roll over again in America are highly deflationary, as is the present debate over increasing American bank capital requirements. GREED & fear is totally in favour of higher recommended capital requirements based on tangible equity and not funny money. But no one should doubt that such higher capital requirements, if imposed, would in the first instance be deflationary in terms of their macro-economic impact. · Any talk of imposing higher capital requirements on the banks, combined with any hint that the Fed might be contemplating sooner or later fixing interest rates higher up the yield curve, is government bond bullish. This is why the critical market for investors to watch at this juncture remains the Treasury bond market as the Fed prepares to stop its buying programme at the end of June. · GREED & fear has been assuming that the Greeks will vote for austerity and the forced sale of state assets, even if they have no intention of implementing such policies, simply because they want to ensure they get their next chunk of dosh. But any stock market “pop” on such a fudge is simply an opportunity to reduce further exposure to risk assets. · Any hard evidence that Germany and the rest of the core are not prepared to underwrite the Euroland periphery will lead to a Lehman-style global liquidity panic. This is because virtually everyone in the marketplace, including GREED & fear, is assuming that when push comes to shove Euroland will move towards fiscal union as well as monetary union. · GREED & fear continues to recommend investors who want to hedge their exposure to the recommended long-only Asia ex-Japan portfolio to do so by remaining short European financial stocks. For this area remains the epicentre of systemic risk globally. · The past four weeks have seen one of the most dramatic polling swings during an election campaign that GREED & fear has ever encountered. That is the political masterstroke pulled off by former Thai Prime Minister Thaksin Shinawatra in putting forward his youngest sister Yingluck as the candidate of the pro-Thaksin Pheu Thai Party. · Yingluck has been a resounding success since her candidacy was announced in mid-May, with opinion polls indicating that Pheu Thai will even win Bangkok. The issue for the Thai stock market, however, is that it is perhaps more likely that the Pheu Thai Party wins by a smaller margin than suggested by the polls, an outcome which could allow the Democrats to form a new coalition with the encouragement of the all important Army. · Such an outcome is a recipe for renewed confrontation on the streets which is why the stock market will not welcome a close result. What would be much more positive would be a convincing victory for the Democrats. But this is now the least likely outcome. · The Thai market is not yet cheap enough to discount such renewed political uncertainty. GREED & fear will for now reduce the overweight in Thailand by three percentage points to neutral by moving the money to Hong Kong, Malaysia and the Philippines, which has now become GREED & fear’s favourite market in Asean. · The Thai market will rally strongly on any signal that politics will not be an immediate problem. But even if there is such a happy outcome in the short term it increasingly looks to be the case that a decisive confrontation is coming sooner or later between the pro and anti Thaksin forces. · The Yingluck candidacy suggests that Thaksin is not willing to retire to a quiet exile and could be ready to “go for broke”. His penchant for risk taking is certainly evident from the track record. 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.