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And Now For Some Permarosiness From Goldman's BRICster
Screw the Xanax, here is all you need to read today as you throw your money into the Ponzi pit. From Goldman's ever so soothing Jim O'Neill
A rather pleasant weekend –again- in Britain. Lovely blue skies and not bad footy results-so far- this weekend.
You know how occasionally, one wonders whether one might be dreaming through parts of your life? Certainly some things going on recently seem quite surreal, and I am not just talking about the absence-until Wednesday night-of planes over South West London for a week………. Anyhow, I shall not talk about 2 things dear to me, but amongst things capturing my attention/to capture yours;
1. World Cup 2010 Dream Team. I mentioned it last week just after it was launched. You have until the 28th to vote, so 4 days left. So far, more than 2,300 of you have… I can see who is currently in the team as it stands, and there is only one United player! I was about to be indiscreet and encourage you to vote for X or Y, but it is your choice…. I shall make one indiscretion. If you are interested in this sort of thing, nearly a year ago , Wayne Rooney said that someone was the best player in the world, after losing the European Cup Final . At the moment, that particular person is not in the team…
2. Ash clouds. As mentioned above. Bizarrely, I was completely unaffected by it . I happened to be in Frankfurt the day before it started and got back just in time. Ironically, the past fortnight has been the quietist on the travel front of the year so far to date for me. I have heard of some real “ Dunkirk” kind of stories. Hats off to the grizzlies though , who are writing “ aha, wait till the big one happens, that will really slow down world growth”…………I have to admire the persistence of the bears, such imaginations… I read some stories of people writing about catastrophe for the US and Canada………..as I say, c’est la vie.
3. Cleggomania has died down a little in the UK, although not much. I have missed both TV debates ( again, how lucky am I??) and I think I will miss the third( bonus….). Just looking at some of the things you see they appear to say in the press, what special personal characteristic does it take to be a politician? I really have never got quite what motivates one to become myself, but I guess , we need someone to do it…..
Anyhow as it relates to UK markets , it looks as though evidence about the recovery has taken over importance from the latest poll about which one of them said what, who is ahead, etc, and we shall see what comes this week. UK markets seem to have-for now-stopped being so sensitive to the polls, paying more attention to the economy.
4. Underlying UK issues. Once the election is out of the way, the macro issues will be the speed of recovery, inflation and the fiscal position, amongst other things. On the recover, Q1 “disappointed” at +0.2pct, but so did Q4 initially as we were told…… , and the 0.1 “flash” is now 0.4. We doubt whether Q1 will end up at 0.8, but…….. On the fiscal situation, I maintain a rather contrary and highly untrendy view that the real underlying deficit is not as bad as –almost-everyone talks about. In the latest month, the running total is around £163bn. Last November, the Government actually forecast £178 bn, so we are already nearly 10pct lower than that. Ben Broadbent has an interesting chart about how sharply tax revenues have recovered… this is what happens with cycles, especially extreme ones, dear reader.. Forecasting budget imbalances is one of the biggest forecasting errors that exist.
I heard my first “disappointing “anecdote for months about the UK in the past couple of days. Someone involved in the retail sector told me that post bad weather, their durables business was not recovering . It might relate to some of the apparent softening of the housing market in some places, but that seems to have only been temporary, but my radar will be even more intense as a result.
5. State of the world;
a/ German PMI hits an all time record in manufacturing- enough said really. How much damage is Greece doing therefore?
b/Greece has had an extremely tough week, but at least the stand off ahead of official money being handed over is over. Greece is a problem, but as I said a lot in recent weeks, it is $350bn. China has imported 1 and ½ times that amount more than a year ago on an annualized basis in Q1.
c/ the bears will soon be wanting to move on to Spain from what I can tell from client conversations, but you miss at least one BIG thing. Their debt position is currently better than Germany and France. Even if the Caja have dramatically more trouble, the debt position might still be not that much worse than the big two.
d/ interesting shift in tone from the Bank of Canada this week……….( ok, it is a stretch to regard anything there as interesting..). As a couple of very interesting clients said to me , “ is this what the Fed’s game really is?, i.e. they will keep telling us all how friendly and dovish they intend to remain, until they –suddenly-change”… we shall see. It might become more interesting if we carry on with this week’s tone of data….
6. CNY and G20. Some people, including journalists present that have contacted me, are surprised that the G20 didn’t say anything about the CNY……after all , the argument goes, the Brazilians did this week, and India did………The answer is easy. They have already decided to do something with the exchange rate, it is simply a matter of the right date….so there is no need for others to bang on about it anymore as DC has realized.
7. India. Talking of this beautiful place , the FT had a rather interesting special one pager this week, on the troubles that India is facing in some regions in terms of “ breakaway” states, and this is within its heartlands, not on the fringes.. No doubt, like with all other complexities, they will cope with it…
8. Chinese property values. Someone alerted me to an extremely interesting piece written by the BOJ about China’s property market. Given the Japanese experience, and the fact that the Chinese have taken some much tougher measures to bring the market under control, this is well worth a read. Bears should give it a miss, as it doesn’t really support your imaginative thinking about China I am afraid…..
9. The Euro. From where I sit still, it is a good job it is a bilateral rate and the US wants to double exports over the next 5 years. Given the underlying degree of complexity with trying to resurrect some economic criteria that might work , i.e. a Stability Pact that functions, what is the Euro these days? It is still in terms of its price- remarkably in some ways-close to 10pct above its fair value according to our GSDEER, which of course says something about how much investors hate other currencies. But I can’t see anything to significantly help except the fact that DC will make sure it wouldn’t drop too much below 1.20-1.25 given their desires.
10. Markets. It looks onwards and upwards to me still, despite all the stuff that has rather, brutally appeared in the past week.
11. And lastly, I always thought Stoke was such a fantastic place…………come on Stoke. You know you can beat Chelski tomorrow…
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He could save a lot of time if he just wrote this. Everybody I run into tells me this anyway. Thank you Benron!
kinda like that definition, seems fitting: http://www.urbandictionary.com/define.php?term=douchebag
12. Did I mention that a weekender w/o the missus is always such a boost?
its stuff like this that really makes me question how a guy like this has a job
German mftring PMI hits all time -- how in the world does that make any sense? What are they making, and more importantly, to whom is it being shipped? It aint us. Is this more Chinese auto sales that are up 115% year on year with all the units landing in underground government garages?
The point of this data isnt to report it - there are, um, fucking reporters to do that. The point is to analyze it.
Does ANY of this make sense? US consumer spending having its biggest jump since 1999 when unemployment was 4% and people werent totally credit impaired? (nope). The price of iron ore being up 90% when utilizations in the steel industry arent anywhere near peak (nope). The retail index being back to its all time high? (Nooooooooopeeee)
Anyway, nice analysis whoever you are from goldman. A 7 year old with a TV remote control could have written the same piece.
@fug
I really enjoy your posts.
Or how about:
"b/Greece has had an extremely tough week, but at least the stand off ahead of official money being handed over is over. Greece is a problem, but as I said a lot in recent weeks, it is $350bn. China has imported 1 and ½ times that amount more than a year ago on an annualized basis in Q1."
Classic Rotten Apples equivalent to Fresh Organic Oranges dissonance. This is grade Z "Hey are you stupid?" propaganda.
When he starts a sentance with anyhow, I read it as "anywho" because that's what his voice sounds like to me.
talk about rose colored glasses - geez.
+1 trillion for star wars reference.
Carl Levin Tues Afternoon- "Its a trap!!"
So ... presumably Mr. O'Neill wasn't among the TBTF bankers allegedly predicting Greek default off the record in DC last week.
I'll have whatever this guy is smoking, please...