By: Ant on Giovedì 15 Febbraio 2007 11:39
Ciao Massimo,
bah, qui ognuno ha le proprie idee.
Guardate qui
Antonio
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Global Investment Themes: Seven Reasons to Expect a Market Crash _ and What to Do About It
http://www.enziosclock.com/appearances/global_investment_themes_seven_reasons_to_expect_a_market_crash_and_what_to_do_about_it
Is a crash on the way? I fear, yes.
* In the US, unit labour costs are rising. Either corporate profits start wilting, or the Fed raises rates. Whatever way: America’s Economic Clock® must worsen -
o Higher unit labour costs to eat into profit margins – and that will make the stock market falter on account of a worsening profits outlook.
o The market decline, in turn, kills any consumer “feel good factor”, so down goes 2/3 of GDP. And that decline in consumption, in turn, means that the other part of the corporate profit equation, turnover, falls, too.
o Alternately, if America’s Economic Time® remains strong, then companies can pass these higher unit labour costs on. But then we have “cost push” inflation – and that will induce the Fed to tighten more. That tightening is of course designed to worsen America’s Economic Time.
* In Japan, markets should be looking at the wheels of the car driving in front of them – not at the driver.
o The wheels are in this instance base money. It has been contracting by over 20% for many months.
o That massive liquidity crunch means that there is less excess supply of money around – and asset markets live off such excess liquidity.
o So as with the US, expect the market to disappoint even more – and this again hits the “feel good” factor and thus 2/3 of GDP – private consumption.
o As with America, less demand implies that the profits outlook in Japan worsens – further exacerbating the stock market’s demise.
* In China, fears are mounting that the government wants to crack down on the stock market (Shanghai rose 130% last year).
o So, the market has wobbled strongly.
o Already, the government has tried to curb the property market
o Probably better to crack down now, way ahead of key government conferences in the latter half of this year
o And there is plenty of uncertainty regarding the government’s currency policy
* In Capitol Hill, protectionist winds are strengthening
o One key reason has to be China’s undervalued currency supposedly leading to a ballooning trade surplus with America
+ The real reason for China’s surplus has everything to do with multinationals operating in China: remove their trade, and China’s trade surplus halves. Remove them totally from China (meaning that she would have to import, instead, and you get a trade DEFICIT of about USD 400bn
o Add to this mix that Nancy Pelosi is the Speaker of the House. When I started my broking career in 1986 she already was extremely protectionist; no reason for that attitude to have changed in her or among her fellow democrats
o And to cap it all: US elections are looming and China is “for free”: everyone gets to beat up on the Middle Kingdom.
o Bush can do little to stop this China-bashing, given his rising unpopularity regarding the horrors of Iraq
o Thus, I would not be surprised to see more protectionism worsening US-China relations.
o Of course, Mr. Chen’s talk in Taiwan of “independence” is ratcheting up tensions in the US-China relationship, too
* As an unscientific point: inexplicably, crashes occur in the “sevens”: 1987, 1997 - and now we are in 2007!
* Defense tensions are mounting:
o Taiwan’s Mr. Chen wants to overhaul its constitution so that Taiwan can declare independence from China
o China has shot down sattelites in space – irking the Japanese
o So, Japan’s Prime Minister Abe wants to overhaul its pacifist constitution
* Finally, regional currencies are having to cope with trade competitiveness against the backdrop of a weakening dollar. This puts regional monetary policies front-stage again.
o The issue: how to keep your currency from appreciating too much against the dollar and thus against other trade-competitor currencies.
o Already three countries are grappling with this issue – and none with any success:
+ China – which is intervening to keep the RMB from rising too much – and which is allowing locals as of 1st February to buy USD50K in forex. It also wants to reduce its “basic balance” – by allowing more Chinese Foreign Direct Investment and portfolio outflows abroad
+ Thailand, where the capital controls were not welcomed by the market
+ And Korea, where the government eased restrictions on Korean investments in foreign assets.
+ The slower that the US grows, the nastier the exchange rate fight will get out here in Asia
So what are the global investment conclusions from this worsening Economic Time®?
* First, if you can afford to, be in cash until the crash hits
* Also, avoid particularly those markets with a worsening Economic Clocks®, e.g. Japan, the US
* Hedge your long bond positions with attractive put options, and
* Once the crash happens, leverage your way back into the markets, esp. of China/Hong Kong.