Monday, March 20, 2017

Voting, democracy and Millennials


Last month’s we discussed the poor financial conditions of millennials. According to the Federal Reserve Bank of New York wages for the typical recent college graduate working full time have risen just 1.6 percent over the last 25 years, after adjusting for inflation. At the same time, student debt burdens for the typical bachelor’s degree recipient who borrowed for college have increased about 163.8 percent. The Huffington Post explained that, “In 1990, the typical college student graduated with debt equivalent to 28.6 percent of her annual earnings. By 2015, that number had shot up to 74.3 percent. Stagnant wages and the jump in student debt levels has prompted growing concern among government policymakers and financial industry executives that student debt risks slowing U.S. economic growth as households reduce their spending to make their student loan payments.

Furthermore, since 2004, homeownership rate for people under 35 have dropped by 21 percent, easily outpacing the 15 percent fall among those 35 to 44 old.

Various studies show that homeowners tend to vote more than renters. Under the title, Have millennials given up on democracy? The Guardian discussed the issue of millennials being less interested in democracy than their parents or older age groups: “Chief among the accusations levelled at millennials is that of political apathy. But the real problem could be even worse than disengagement: it seems many members of Generation Y could be ready to back a despot. A large-scale survey of political attitudes conducted by the Lowy Institute for International Policy in Sydney found that just 42% of Australian 18- to 29-year-olds thought democracy was “the most preferable form of government”, compared with 65% of those aged 30 or above…. Millennials themselves, asked why they do not back democracy, mostly say it “only serves the interests of a few” (40%) and that there is “no real difference between the policies of the major parties” (32%). A similar malaise is expressed across western democracies.

Unsurprisingly, the millennial generation is the least entrepreneurial of all. According to Cowen, millennials are “most committed ideological carriers” of the new spirit of complacency.

Finally, concerning the millennials apathy towards democracies remember that as Alice Walker observed, “The most common way people give up their power is by thinking they don't have any.”


Monday, March 13, 2017

I would buy European stocks




The US markets is completely out of range with other markets in the world, such as European markets, Emerging markets. So I think there will be a closing of this diverging performance with Europe outperforming the US or both going down or with the US going down more.

Investors should understand that markets can also go down and it would not surprise me to see the inflated asset markets especially the financial markets being down 20 to 40 percent at some point. The typical stock in America is already down 9 percent from a 52 week time and in the last three days wouldn’t you think that this is maybe a little bit funny? Every day there were more new lows on the New York Stock Exchange than new highs and this 1.6 percent below the all-time high in the market, that should tell you something. 

Wednesday, March 1, 2017

Asia and China could do well in 2017


Well I think that emerging Asia - China looks quite attractive, for how long? who knows. But for the next 3 months money can flow into China. The economy has surprisingly has begun to do quite well. We see that in retail in Hong Kong, we see that in the Hotel industry and we see that in the demand for Commodities. 

What has done relatively well is selected commodities. Last year Zinc and Iron Ore were the best performing asset. This year Copper has been very strong, Gold last year was up 9 percent, this year is again up 9 percent. So I think investors should again be investing in Resource Stocks. Because when you really look at Trump and his Administration, I think further money printing down the line is inevitable. Maybe they increase rates a little bit here in March, that is possible. But the bond markets will have already discounted it. 

So bonds are relatively undervalued compared to Equities. And Emerging Markets are relatively undervalued, Resource stocks are undervalued, and I think Consumer Staples are also reasonably priced as well as REITS. I have a large exposure to REITS in Singapore and Hong Kong.

Monday, February 27, 2017

Markets going up is not always a bullish signal

Well we are very overbought, but I'd like to put things into perspective. Whereas Trump has said he will make America great again. So far this year numerous markets have done very well, Mexico, Brazil. In Asia we have many markets up 10 percent and more. So I think the question of Asset Allocators ... the big question for 2017 is what will perform relatively well - Emerging Markets, Europe or US. I think if you look at the valuations of the US and all the super bulls, they may be right and the market continues to go up. The market also continued to go up between December 1999 and March 2000 and gave back five years of advance. 

So when the market goes up doesn't make me particularly bullish when the valuations are out of sync.

Sell off will be like an Avalanche

As the market goes down it will trigger selling and then it will be an avalanche. 
You don't know what the catalyst will be. But nobody knows the reason why the market peaked out in March 2000, nobody knows why the Japanese market peaked out in December 1989 and so forth. We just don't know but something usually pushes markets down when they are very overbought and when sentiment is very bullish.


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.

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