Conflicting Currencies?
*Ohhh China China China – aren’t we naughty? Flexing your muscles but then being all coy and pretending you don’t want to exert any influence through your immense strength that continues to grow by the day – it’s like a boxer knocking his opponent out with a single punch and then running over to check he’s OK in a false expression of concern and regret that his opponent “walked into his fist”…you’re not fooling anyone my friends!
*One minute they are happy with the US$ and the current administration’s policies, next thing you know they are talking about the IMF setting up a world super-currency (synthetic) to become the world’s preferred reserve currency. One day they’re talking about openness and the greater acceptance of foreign influence in corporate actions and mergers and acquisitions, a week later they prevent and prohibit international firms from approaching domestic partners with full acquisition flirtations. There was even a flurry of disappointment, quickly denied by the authorities, that foreign firms would no longer be able to buy or sell stakes of financial firms majority owned by the state (umm..all of them basically) – China continues to face the difficult position it is finding itself in as it daily grows in influence and pivotal importance to the general health of the global economy. Some believe its intentions are honest and for the greater good, others a little more cautious. Whatever they may be, the CSI300 is still the world’s best performing (closed to most us) market, +35%YTD and rises each time any mention of a new stimulus package is leaked. Watch this space for a rumoured announcement of another circa $600bn package just ahead of the G20 next week – China’s dragon breathing fire to ignite the markets will surely steal any US+ European thunder.
*Markets seem to have quietened down following the misplaced euphoria earlier in the week. Yes, Geithner and Bernanke have done their best to lessen the burden of fear across investors and yes some steel-nerved traders have made excellent returns in the last 2-3wks, but the general environment is still quite fragile and as seen yesterday in the US (S&P +.96%, DJIA +1.17%) and Asia’s performance today (up around 2% on majors) there are moments of positive performance but nothing yet that screams 100% confidence in lack of future negative surprises. Reinforcing this, Europe is pretty much flat across the board, and US futures only slightly up so far (DJIA +46pts, S&P +6pts). Gold has risen off its resting platform of $920/oz and still remains within the range before what may be a quick break to $1,000/oz on any rally negative surprise. Oil similarly stable at $54ish/brl. Unfortunately for the global economy the BDIY falls again for the 11th straight day on disappointing news from some world port operators – its fall is mild in comparison though (-22% in 10days) to the +125% gain in previous 3mths.
*Look out for GDP QoQ figures from US today (-6.6% annualised cons) and Personal Consumption (-4.4% cons).
Czech-mate…
*In a bizarre move, the outgoing EU President (Czech in the hot seat at the moment, but about to resign) condemns the US’s efforts to save the world as committing all on the “road to hell” – he’s been listening to one too many Chris Rea records me thinks – but a more serious rift is exposed in his rant on the widening disagreement created by the “Buy America” clause that we have discussed here a few times already. The timing is critical as a cynic would point to Gordon Brown currently travelling in the US whilst the rest of Europe debate issues at home ahead of the G20 meeting next week (or is it the American-China G2 really?). Politics has created much of the procrastination we have already endured in response to the global crisis, and it doesn’t look like politics will be set aside anytime soon either. For those few who cling on to the belief that the 1930s US Depression was caused by too much spending rather than too little, any further attempts at aggressive stimulation of the economy by quantitative easing is an anathema. Is it really a disagreement about a historical event that took place in a very different day and age compared to where we are now, or a historical fear Europe still clings to when even the mere mention of “infl…” crops-up. Come on people, let’s grow-up shall we?
Saudi Strength…
The news that Saudi is setting-up Hassana Investment Co - it will invest in real estate and commercial projects, and stock markets in the Middle East and overseas – is a very welcome move for the GCC region as a whole. Anyone that knows anything about the GCC will immediately realise the huge potential of Saudi becoming more involved in the extremely attractively valued GCC markets, understanding that is the most industrialised and clearly wealthiest member state. In fact, along with Qatar, it consists of the most attractive investment opportunity itself and will go from strength-to-strength as long as the road-to-reform is followed by the current King (doing a good job so far considering the restricted position the religious cleric place him in).
*Saudi’s large and young population (27m, 80% between ages of 18-30yrs) makes for some very enticing demographics and analysts will continue to watch with great interest how the baby-steps taken in recent months may lead to some deeper and more fundamental changes.
*We initiated on a Saudi Real-Estate development company, Dar Al Arkan – please call in for a discussion and take a look at report here.. https://www.citigroupgeo.com/pdf/SEM03194.pdf
Talk about unlucky…
*The story of an Japanese man who personifies “being in the wrong place at the wrong time” really brought home the sheer bad luck some unfortunately face in life – he has been recognized as an official survivor of not one but TWO nuclear explosions – the awful Horoshima and Nagaskai bombings that ended the fighting in the Pacific in the 2nd World War – if he can live through two incredible moment of man’s evil failings then surely we can all get out of this financial crisis – to live to see the next one!
No comments:
Post a Comment