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 In early July, I call to short US stock and buy chinese |
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theoretical
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加入时间: 2006/10/13
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作者：theoretical 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
I was lucky then. Now, the question is what is the next?
Wish you enjoy the article.
“Ben Bernanke has blinked and the morons on CNBC are grinning again,” notes CLSA’s Christopher Wood, in an interim “flash” edition of his Greed & Fear newsletter.
The Fed chairman “is to be congratulated on the relative subtlety of his approach by focusing on the discount rate and the need to reliquefy the interbank market,” says Wood. But, he warns, “by reducing the penalty borrowing rate at the discount window from 100bp over the federal funds rate to 50bp and by allowing the banks to obtain 30-day loans rather than overnight money, the Fed is flirting dangerously with moral hazard.”
Still, he notes, “it is a good thing that the Fed has apparently not relaxed the list of securities eligible as collateral for these operations,” although we don’t have a clue “what the non-transparent ECB has been up to.”
Having joined the growing band of commentators to resurrect and cite the late economist Hyman Minsky in the recent market turmoil, Wood now focuses briefly on Walter Bagehot who in the past week has enjoyed more attention than usual - not least from the FT’s Martin Wolf. It may not be the 19th century, notes Wood, “but the view is that Walter Bagehot got it absolutely right when he stated that a central bank, acting as lender of last resort, should only lend against rock solid securities and at punitive interest rates”.
“Clearly, the Fed chairman is not living up to those high standards, though he is also not yet completely caving in to the Wall Street clamour.”
It is now crucial that “market discipline is re-asserted on the profligate behaviour that had become commonplace in the credit world” - on the grounds of both “market efficiency and morality”, says Wood: “It is obscene to watch the clamour for bailouts from the debt peddlers at a time when ordinary workers in America have for years seen their wages marked to market in the name of globalisation and free markets.”
As for the market consequences:
The bullish story is that markets will now be looking confidently for a federal funds rate cut at the next FOMC meeting on 18 September, and for more cuts to follow later. The eurodollar futures are now discounting a full percentage point cut in the Fed funds rate to 4.25 per cent by the end of March 2008.
Greed & Fear will view the coming rally globally and in Asia as an opportunity to go short again, most particularly to go short financial stocks in the western world which have been profiting from securitisation.
“The simple reality,” according to Wood, is that “the asset class called ‘credit’ is blowing up”.
Investors everywhere are relearning an old truth. That is, that it is stupid to invest in something that cannot be explained in a single sentence. This means that the whole world of structured credit is going to continue to be viewed with great suspicion whatever the Fed or the ECB is doing. This is a massive problem because the credit asset class has become so big as a direct consequence of the global credit bubble which has now begun to deflate.
The best data on the size of the credit asset class, according to Wood, comes from the BIS, which, he says, is “the only international economic organisation worth paying any attention to as its annual reports have for years consistently warned of the dangers posed by securitisation run amok while the World Bank, IMF and OECD have slavishly mimicked the consensus”.
The BIS numbers are: International and domestic debt securities and credit default swaps totalled US$97,600bn at the end of 2006 - this compares with world stock market capitalisation and GDP of $50,000bn and $48,000bn respectively at the end of 2006.
The key macro point is, according to Wood, “the sheer size of the credit asset class, and the above data excludes many other sorts of OTC derivatives, relative to the economy and the stock market”.
This is why, even if the authorities do decide to bail everyone out, “it is not an easy thing to do”. In fact, says Wood, “it is devilishly difficult, for the problems have spread throughout the system. This is the downside of securitisation, and why it is so deflationary in practice.”
In terms of investment advice, relative-return investors in Asia “should view any bounce this week as an opportunity to re-arrange portfolios,” says Wood, reiterating his view that Asia is in a “long-term asset reflation cycle”. Property stocks are likely to benefit from the coming decline in interest rates and infrastructure plays throughout the region are also worth noting. “For with US growth likely to slow dramatically as deleveraging sets in, there is every need for Asia to engage in counter-cyclical infrastructure stimulus.”
Infrastructure cycles were “happening in Asia anyway,” adds Wood. “They may now be accelerated. Exporters and cyclical and commodity plays should be sold on a bounce, as should financials with structured finance exposure. CDOs and CLOs will continue to blow up whatever the Fed is doing. Credit rating agencies will continue to accelerate the downgrading cycle as they find themselves in the direct line of political fire.”
Meanwhile, concludes Wood, “all the evidence is that the US housing market continues to deteriorate and that this will feed through into weaker personal consumption in the months ahead.”
作者：theoretical 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 In early July, I call to short US stock and buy chinese -- theoretical - (5528 Byte) 2007-9-03 周一, 09:03 (1088 reads)
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