Wednesday, February 22, 2017

China focused Asian countries

It is a Chinese-centric Asia nowadays. The exports of Taiwan, South Korea, to China are much more important than to the U.S. All the Asian countries for them, exports to China are the key, tourists from China are the key.

When you see Mr. Trump lambasting the exporting countries of Asia, calling China – he hasn't declared it officially a currency manipulator and so forth, what is the reaction of the leadership in Beijing ?

Everybody in Asia and around the world, including Mexico and the Europeans will say, 'the U.S. is no longer a reliable trading partner and no longer a reliable ally. We have to look after ourselves'. So the Chinese are pushing essentially domestic-led growth.

Monday, February 20, 2017

Could we be near the market top ?

I like the US markets in a sense that for the first time since the bull markets began in March 2009. There is a euphoric move. In other words we are leading to a top somewhere here. 

The shorting pit is dangerous because we don't know how far Central Banks are still going to print money. If you print money and you have large deficits that lead to higher government debt. 

Under Mr Obama US debt almost doubled to now $20 Trillion Dollars. Then stocks can go up and economic conditions can worsen. So the shorting game, I think you have to be short very specific names that have deteriorating conditions.

But I think the way to play it is to own emerging markets. Everyone makes a huge hoopla about US markets going up, Hong Kong is up 9 percent, Singapore is up 9 percent.... Mexico is up 6 percent.... Brazil, Argentina is up almost 20 percent. So actually Trump policies have been good for foreign markets.

Monday, February 13, 2017

US and US corporate sector benefited most from globalization over the last 20 years

Many markets in Asia are up 8 to 9 percent. In Asia almost every market has outperformed the US.

Watch the full video here

Thursday, February 9, 2017

Money printing will not be easy to stop

The most attractive sector in commodities is probably agricultural commodities -soybean, rubber, sugar, etc .- their prices may still go higher. 

The precious metals are also attractive for a simple reason that the policies that the central banks have embarked upon, mainly money printing, will be very difficult to terminate.

Wednesday, February 8, 2017

Fed and interest rate hikes

Since the end of last year, the US dollar has been weakening and I suppose that the policies of the US would rather welcome a weak dollar than a strong dollar. It is not my view that it would help the US in the long run but that of the policy maker's.Going forward, dollar assets are not the most desirable assets.

The Fed may increase interest rates at some point, but they will probably leave real rates negative for a long time. We have had many American property prices already declining and also rents declining, which essentially would rather indicate weakness in the economy than strength. Whenever the next recession comes, the Federal Reserve in my view will liquify the system with some sort of quantitative easing.They may not call it QE, but the impact will be the same.