|
THIS
WEEK: BARRON'S GOES BULLISH The Markets “Remain on the sidelines was last week’s refrain,” and it continues going forward as world events struggle for the hearts and minds and dinero of the markets. Surprisingly, the perennially bearish Barron’s seemed to push hard in several article for a bullish scenario in its recent issue: The argument: a slowing U.S. economy eliminates the need for interest rate hikes by the Fed while a slowing global economy bursts the oil market’s bubble and brings a barrel back down to a c-note. I do think the bullish case rests on a rather parochial, U.S.-centric view of the financial markets while the more likely bearish case is best argued from a global perspective. In the bearish scenario, the U.S. economy does indeed stagnate as the IMF is now forecasting. In addition, inflation throughout Asia, Europe, and Latin America leads to interest rate hikes and a clear contractionary shock. Toss in a few food riots and inflation strikes here and then and you’ve got all the ingredients for a nasty little dollop of chaos. The bigger question we will be grappling with for a very long time is whether the food and fuel markets are in a long term upward secular trend, the coming likely cyclical dips notwithstanding. Methinks this is likely the case. The question is whether political systems around the world will respond positively to this challenge with sounder energy policies and a renewed commitment to agricultural reforms and innovations. Alternatively, will the global polity regress into a world of food and fuel subsidies and export restrictions? Stay tuned…. Presidential Politics Nice piece in the weekend WSJ on a possible Jim Webb VP run with Obama. The gist is that he would be a compelling candidate on the Iraq issue but given his background, a bit of role of the unvetted dice. Are you feeling lucky Barack? Check out this article at Canada.com on the “Dream ticket” and some new polling numbers. Here’s an excerpt: “…three in 10 Americans would be more likely to vote for Obama if he named the former first lady his vice-presidential running mate. The Ipsos survey, released exclusively to Canwest News Service and Global Television, found the benefits of adding Clinton to the ticket far outweighed the negatives for Obama. The poll showed only 20 per cent of voters would be less likely to vote for Obama if Clinton was his running mate. In particular, 43 per cent of Democrats said they would be more likely to support Obama if he choose his vanquished rival. Just 12 per cent of Republicans said they would consider Obama more favourable if Clinton was on the Democratic ticket, a potential downside in the Illinois senator's efforts to win support among moderate conservatives. "At this point, picking Hillary looks like a positive move," said Mark Gross, associate vice-president at Ipsos Public Affairs. Quick Takes It seems that even Chinese Olympiads are being held hostage by the Beijing government. So says an article in the NYT about Olympic gold medal winner Yang Wenjun. Kind of funny when Brazil’s central bank calls for higher interest rates to attack inflation in other countries given Brazil’s inflation history. But that’s how far we fallen when Brazil is more responsible than the U.S. in its monetary policy. “Any
trader or investor who ignores the power of macroeconomics over the
world’s The Market Edge Market Summary from www.marketedge.com
©
2008
Peter Navarro CONTACT
INFORMATION DISCLAIMER: This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling, or holding of any financial instrument whatsoever. Trading and investing involves high levels of risk. The authors express personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The authors may or may not have positions in the financial instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future performance. |
