Thursday, May 21, 2009

The Indian Summer of Equities

1."The outlook downgrade of U.K. debt is being taken pretty negatively," said Rick Meckler, president of investment firm LibertyView Capital Management in New York. "It sets a precedent for what could start to happen to a lot of the world, given the amount of spending that's going on."
2. Gross told Reuters via email that investors fear the U.S. is "going the way of the U.K. -- losing AAA rating which affects all financial assets and the dollar."

Looks like everyone is cock a hoop over a recovery and why not as the stock markets disconnect with reality pushes the indices sky high, sucking ever more clueless bumpkins like a thermobaric bomb into the frying chamber. Since that fateful day on March 9, when the earth looked like dropping off beneath our feet and the sky come tumbling down headlong with it after, the local, Asian bourses, Euro marts and American Exchange have bounded up like a whippet after a hare. Heady advances indeed for those fortunate enough to hop into the bottomost gondola on Mr.Wealth's merry go-round for another ride up to the stars and a stomach churning spin back to Terra Firma.

But reality has a nasty habit of chomping off the meat of an argument so much so that the arse of every well titivated plan, every well coiffured prediction and every spiffily clad assumption should always be wary of the fangs of truth lest the derriere of those hallucinations is loped off suddenly by a painful ferocious bite.

Recovery in exports? Hold your horses, lest they bolt helter skelter neighing in laughter. China on the mend, bent over in mirth as the figures dont blend with the trend . . Lets all get real with the deal, for starters:

1.The American political establishment has been waffling through its antipodean mouth ( know where) rather than the one the Good Lord fashioned on its face.To put it simply, it has been talking up the market. Ms Fraudster has been busy shaking up Mr Confidence by massaging away Anxiety, shaving off Fear, perfuming away Doubt whilst ironing off the crinkles and patting down the pleats off his clothes, and buffing up the shine of his shoes before setting him off strutting like a Dandy out to set the ladies aflutter and the market astir.
In actuality, Uncle Sam has been reduced to a latterday pervert sans his sainthood as he gropes and pinches for imaginary bottoms in every economic sector only for his itchy hands to be spanked for their immodest advances by data showing that no bottoms are there to be fondled with in a gravity defying free fall
From Bernanke's factless opinuendoes and Geithner's unstressful bank exams to data that is mined for the nuggets of the lowest negatives, to how slothlike the decline is, to blatant manipulation of economic data, you name it, Uncle Sam has manufactured it from thin air no less. Truly a feat which would leave industrial mavens gasping in wonder, Wall Street charlatans jumping in glee and Main Street prurients grasping at Hope. I will provide the details of how hocus pocus and illusions have been wangled before gullible eyes stoned into a Copperfieldian hypnosis over the next week or so, now that the quarterly results of every major economy is almost in. For now, my long term projections remain : the Dow to scrap 3500 by fall. The US to contract by 8-10%% and the future ableak with leaks in growth, peaks in unemployment and freaks spinning more yarns.

2. In Asia, while Japan bobs about comatose in a sea of despair, China, the darling of Mother Earth's East End, have been conjuring up magic tricks that will leave even HK's renowned celluloid shamans farting in shock humour and US conjurers burping in schlock horror. Why not? when idling factories, spiraling unemployment, shrinking export markets, falling Industrial Production indices, fleeing FDIs and most important of all collapsing electricity production can all be blasely interpreted as a 6.1% quarterly spurt while the once mighty Chinese juggernaut stands forlornly at the cross-roads of deflation or more likely hyper-inflation (with all that overstimulation by a randy government) idle capacity and social chaos brewing in the belly. Forecast : a 5-6% growth rate for 2009 and next year a kaboomlike implosion wrought either by a muscle flexing Mr. Inflation or his "better half" the anorexic bulimic, Mrs Deflation. (China's price stats are eerily beginning to resemble Japan's plunge into ennui in the Lost Decade).And with the value of their US Treasury Bonds teetering on the brink with the Fed's Quantitative Easing and a free falling dollar, expect the Yellow fellas to wring their hands in despair for placing their nest egg in the Eagle's lair.

3. Japan, the land of Zen has lost its yen for life's high tens. The Sun is indeed setting in the Land of the Rising Sun as the Japanese consumer besotted with the joys of deflation tightens the Gordian knot of spending and hara kiris his economy with his mixture of thrift, fear and yearning of cheaper Tomorrows while Mr Present, blundering in from an unsavoury Past lurches about contemporary existence like a comatose drunk, no amount of stimulants or financial steroids able to kick him out of his drunken stupor. Once the shinkansen of growth, all that speed and verve has long vanished in a poof faster than top speed. So, as the slowcoach trundles along the rusty rails of export, the Japs must be wondering when on earth if ever their export machines hum the merry tune and the good times will roll again both in the Ginza and with them, Geishas. Forecast: Japan to contract by 6-8%. Next year: with Sony, Toyota, Panasonic tottering, the pace of contraction to double...........

4. Closer to home and too close for comfort, Singapore is finally inhaling the spores of the contagion, big time. Quarterly growth shrank a whopping 14% and despite press reports that Spore is keeping a straight face amidst the bedlam, consider that to be the Stiff Upper Lip mocking bravely at the Inevitable while beneath them crotches fast good old testicular fortitude shrinks like a deflated balloon after all the glory of puffery. In a scene reminiscent of the Titanic, Spore is ramping up the orchestra while the decks below are inundated in water and mini fires breakout in the boiler. Forecast; -8 to -10% this year and over the next 3 years, the ship to go down with the jazz band in full swing in the ballroom of dreams as the Last Dance featuring coiffured hairdos, elegant gowns, and fragile porcelain faces whirling in twirls with wellpressed tuxedoes,grim stony faces topped by swept back manes spellbounds everyone into the big Illusion.

4. Home at last, the mood is getting sombre by the day as Moody decides to downgrade the local banks ability to stay afloat if a stampede happens as the government is perceived to be too immersed in its own fiscal hangover to lend a hand. A long time ago, as the trees shed their clothes, Father Frost rummaged the land with his icy fingers and Miss Snow shedding her first tears of despair while Squirrel squirreled his chestnuts in his homemade bank. I had called on BN to reveal whether they could guarantee deposits. Surprisingly, given the Davidian proportions of this Lilliputian blog, the Boffins did respond (not to me) that they had the wherewithal to guarantee nest eggs till the hatchlings molted in 2010. Now, with this, I am not sure whether that still holds...more ominously all our 3 main trading partners are in deep trouble and with the EU following suit ( a contraction of 2.5%) in perfect harmony, there is everywhere but nowhere to export to, "a case of country, country everywhere, but not a market to sell my ware". Forecast: a contraction of 4.5- 5.5% this year. Next year? Lets say its too far away for me to soothsay the affray of doomsday lest I trip over my chassé.....

So there you have it in a nutshell, from beyond the Pacific, I have winged across the Atlantic into the Indic to the hearth of our hearts...a loom spinning gloom and doom with no room for oomph. Oh, when will it all unravel, this surreal, ethereal revel? I predict as early as tomorrow or as late as June when the real summer begins.............
Revert:Sometimes "Charlatans" like me do hit the Bulls Eye and miss the Bear's Paw but then we can miss both too!! hahahahaha.......LOL

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