Market leaders are revealing themselves
Posted by Frugal on August 24th, 2010
Slowly through each wave of rise and fall, markets are revealing where the capitals are concentrating. The market leaders are no longer US, Japan, nor Europe, but Brazil, India, China, and Taiwan.
US market is facing heavy pressure again today. S&P 500 has broken support at 1080/1085, and then 1065/1060. The technical pictures are simply getting worse and worse. However, that is not so for Brazil, India, China, Taiwan, and other southeast Asian markets. They are far above July low by some 10%. The good news is that I believe these market leaders are not forecasting a repeat of depression, or a serious bout of recession. The bad news (for more mature markets as to emerging markets) is that the better days are not for us.
Going forward the stock markets will be increasingly selective. Given the extremely low interest rate environment, there are LOTS of hot money trying to find a home. But it’s probably not going to be in S&P 500.
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August 27th, 2010 at 1:10 am
Dear Frugal,
I agree that the Western countries especially those in Europe, the U.S. are loding their steam and the current problem clouding the global econimic recovery is the loose monetary policy exercised by the central banks of the advanced countries chiefly the Fed, BOE, individual central banks in Western Europe as well as China recycling their export receipts in the West mainly buying the American bonds so as to save their foreign exchange reserves as well as one of the major means to suppress their currency, the RMB low enough to continue their massive exports sold to the West where they could gain the necessary foreign exchange reserves to fund their long fprgot economic development instead of clinging to their old doctrine as well as ideology of exporting revolution and communism but the dilemma of the current economic mishap is the collapse of the debt market and it is not that the financial sector lacks credit but that the lenders or the banks are reluctant to lend whilst people and business are willing to borrow because the econimic outlook looks grim and currently the booming global equity markets are supported not be good economic fundamentals nut rather nurtured by another round of asser price bubbles especially in the housing market not in the advanced economies but this time around, in the BRIC countries especially in China, India, Brazil as well as in Moscow. Sadly, the labor market has not improved and the housing market in the U.S. as well as in Europe are not recovering and if we trust that the engine of groath has shifted to the BRIC countires, we would be mistaken because the local consumer market in all of the mentioned BRIC countries just could not support the growth of the global economy. Yes, China has become the 2nd largest economy of the world surpassing Japan but its per capita GDP ranks as the 99th of the world, not to have to mention about India, Russia or Brazil so that if we have to be pragmatic, we still need the recovery of the advanced economies in the West before we can walk of of the current global recession and given more bad news coming out from the U.S. as well as Western Europe, we may expect the so-called recovery is already oversold and to enhance or implement a second round of fiscal stimulus is easy but does it going to have the effect as suggested by Krugman is questionable and Maynard keynes would say so but times hav changed and the global economic dynamics has changed and if we look at the flood of worthless paper assets flying around in the global financial markets, you would be amazed as to the proportion of the purchasing power of our currencies that have been gone and inflaiton has , in fact, have dissolved our wealth and the paper money we have on hand looks good as cash is still king in time of distress but at what cost and at what price….The world needs Bretton Woods 3.0 as Bretton Woods 1.0 is good but gone and Bretton Woods 2.0 was artifically constructed and has proved to be ineffective.
August 29th, 2010 at 6:06 pm
The Market. Yes, but which market?
I pose the question to try and illustrate that at any point in time there is probably a bull market somewhere in the world. But where?
As a former registered investment advisor I have recently found an excellent source for learning new profitable portfolio management techniques.
A person with a thirst for learning such things should consider Tom Dorsey’s new book “Point and Figure Charting, 3rd edition”. It does take some studying but with knowledge gained from the book one can utilize the DorseyWright website and their exhaustive point and figure charts to pinpoint just where in the world that bull market may be.
As a side note, I have no connection with the above only an avid reader of the book delighted to learn some new ideas after a career in the financial services industry going back nearly thirty years.
As to the current U.S. market or markets (there are several), some inverse index ETF’s come to mind as excellent vehicles to profit from downturns. Accurate timing though is the key.
August 29th, 2010 at 7:12 pm
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