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Here Is Your Latest Dose Of Xanax From Man U Board Member, BRIC Inventor And Goldmanite (In That Order) Jim O'Neill
From Jim O'Neill, proud inventor of the BRIC and fierce supporter of optimism everywhere. Funny how the permabulls consider Greece and everything else that can push the world into disequilibrium belongs in the rearview mirror.
Time flies when you are having fun? Doesn’t it, or does it? Anyhow, I am back from yet more travel, this time a couple of days in Florida, and a quick 24 hours on the –rainy- shores of Lake Como at the Spring Ambrosetti forum. Of note;
1. The state of the world/me being an optimist. Judging by the mood of people at Ambrosetti, and the nature of the questions and comments I received on both the two panels I was on, and separately in conversation, people continue to think my optimism is , sort of nuts. At the heart of it, people simply find it impossible to believe that global demand can remain above 4pct-ish if the US is struggling. There is one major dilemma with this, substantially held view, it is called “ the evidence”.
A further derivative of this, which is slightly more understandable is the idea, that global demand north of 4pct, is only taking place, because of an unsustainable boom in Chinese investment spending. The more bearish camp within this general camp simply doesn’t buy the idea of the Chinese consumer being the new story, and they will use whatever argument they can get their hands on. ( including ignoring all the evidence to the contrary…..)
All of which is just hunky dory in my opinion, as when the price action, and objective evidence tell you the same thing, and the general mood is different, that is what I just love…….so onwards and upwards it seems to me.
2. Greece. Europe at its greatest “smoke filled room” stuff last week, and it certainly looks as though Greece will be able to get through its near term funding. Linked to the above comment, it is truly astonishing how much everyone wants to discuss how Greece is going to pull the world down…As I said in a previous note, the only way this mess takes even Europe down is if Italy gets embroiled, which after my 2nd trip there in 3 weeks, I just don’t see. I think Italy might be doing better than many casual observers are aware. Moreover as Erik Nielsen pointed out in his weekend note, the real recent story from Europe is “better than expected” recovery going through Q1 with the German data especially catching.
Euro problems are far from over however, as the markets think about a currency created out of nothing with its one of its core holding principles, i.e. the Stability Pact, in tatters , at least for now.
3. $/ Yen………..whisper it quietly, but it has broken above its 200 day moving average, and all that in the month of Japanese half year end…..it could be “game on” here, folks…that would be a nice Spring present, would it not?
4. Russia……lots of people still find it odd that we like Russia for a trade this year. It is simple, they are easing monetary policy still, oil prices have doubled from the bottom, and Russia is absolutely and relatively cheap in terms of P/E type stuff. And, there is a slight chance of some supply side reforms coming……..each time I come across a policymaker from Moscow, I smell that this is possible……
5. UK budget came and went, and the country has still not gone completely through the floor….Election is now on anyone’s lips, although a lot of data coming up also…the data is probably just as interesting as the opinion polls, for now..
6. Footie. Green and Gold and top of the league….although slightly tricky challenge of Bayern coming up this week……..
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Either the man is on good drugs or he is certifiably insane or he's being paid well to bang the drum of good times. Or all three.
And if everyone at this conference wasn't feeling good about the world, who exactly is pushing this market higher. If everyone is holding their ears and closing their eyes in anticipation of the balloon popping, who the hell is pumping more air into it? These are basic and reasonable questions. Anyone wish to take a stab?
R2D2 and Hal.
oops duped sorry
i for one am relieved to see that by stepping foot in italy 3 times, this guy is able to divine the total state of economic health of the nation - because, hey, he landed, talked to a few people, walked around a little, probably had some dinner -- what else needs to be done?
Naturally he hadnt stepped foot in the US in 2005, 2006, 2007 or 2008 because somehow it escaped his attention that the whole place was burning to the ground - the weird part about this one was "price action" wasnt exactly giving him any clues either, was it?
Ofcourse every export economy is doing better, thanks to the global whipping boy, the US consumer. For reasons passing all logic and understanding, the government has conned US consumers into spending again, and dopes that they are, they gladly oblige. Savings rate has gone from 3.5% to 6% to 3% since the crisis hit, and this has all come without a single job being created, wages coming down a lot (er, sorry, productivity going up) and the price of everything people consume day to day in the real world doubling or tripling.
Not to worry tho starting friday the jobs are gonna come rolling in
this guy actually illustrates the uselessness of his job by constantly defaulting to "price action" - because lets face it, if he actually took any sort of balanced approach to his work, he would see plenty of things to be worried about. Is everything happening in china universally positive? ofcourse not. Are the problems greece is experiencing in any way localized to greece? ofcourse not. Does a shot higher in us interest rates matter, and have problematic consequences? naturally. Does the end of stimuli programs globally carry risk? indeed.
so why bother traveling all over the place when all your decisions are based on "price action" anyway? know where the nakheel development corp bonds were trading the day before they defaulted, jim? 98 cents on the dollar. know where FNM was trading the friday before the company was seized by US regulators? well north of $5.
the great myth that hopefully dies once and for all when this all breaks bad is that there is information in asset prices.
Who does this guy write for again? People Magazine? Us Weekly?
He writes like a fuckin gossip columnist.
I thought the same thing--gossip columnist..."ahh, let me tell you about my hectic travel schedule and all the beautiful and important people I rubbed shoulders with, and who took me in their confidence." All fluff and no substance.
Sounds like he's trying to God's work.
I must admit tho' after reading this I do feel a bit numb...
I love it when snake oil salesmen try to sound folksy. Very compelling "evidence" Jim.
Hubris is our main export
http://www.newsweek.com/id/234589
To me its all relative, being an optimist/contrarian, I gotta say I buy it. As for the money, I prefer looking for potential. China has 1560 million (generally very hard working as there is no social security) people living there (USA 307M), to me thats potential.
So what is the damn "evidence?"
I am so curious to know what the bulls, or at least people that have so confidently bought stocks for the last year are aware of that I am not. But then, All I have to do is remember that Dennis Kneale and Larry Kudlow have been cheerleading since last spring, based on, nothing.... Things are "Better than expected", "New Normal" etc.
Is everyone who reads this blog a Bear. Can a real bull step up and make a case for goodness sake?
I feel refreshed and oddly violated at the same time. I wonder what happened?
Why, I have been DOUCHED!
I always thought being DOUCHED was a female thing. I hadn't ever considered that we males could join in the fun. So that's what it feels like. At least I now have a word to go along with the experience.
Jump into a freezing ocean on Jan 1? Check.
Climb Mt Everest? Check.
Drive 200 MPH? Check.
Be DOUCHED? Check.
Ah, life is complete. Take me Lord, I'm ready.
very telling, original metaphor.
He writes for Tatler....Roubini & Company at conference dined on freshly chopped calamari salad...lmao...Douched...check...:-)
I was wondering why Jim's analysis doesn't seem to jive with that of his firm, or of his colleague Jan Hatzius. Hatzius has a very dim outlook for coming quarters and is responsible for Goldman being far and away the most bearish forecaster for interest rates. As we learned this week, the range of predictions from primary dealers on year-end interest rates are mostly bunched up in the "higher" to "much higher" categories, with Goldman a notable exception calling for ZIRP to continue ad infinitum and for the 10yr yield to be 3.2%. As one of the newly minted celebrity economists, Hatzius has preached about deflationary pressures and deleveraging as much as anyone. Do deflation and equity levitations always go hand in hand, or is that part of the new normal? Is everything honkey-dory in O'Neill's world (especially given that I believe he is a Brit, he might have a look around his own country), but so dreary and dank in Hatzius' world? Seems like so many of GS' lines of BS. Am I supposed to short the Euro or buy it for a spike? Am I supposed to buy a billion worth of AAA rated CDO's or am I supposed to short the shit out of the ABX index? Should I round up all of my best pension fund clients because oil is heading to $200 or should I have my massive prop desk dump their entire position on the chumps? Blah blah blah, Ginger. Blah, blah, blah.
What about the current Baseline Scenario in this context? It's a sort of Hegelian synthesis between emerging-markets optimism and pessimism. Speaking as an ignorant yahoo, I'd be hesitant to bet against the financial industry's ability to inflate the next big credit bubble in the developing world.
(The last time I commented on this, I was lucky to recieve some interesting replies which you, dear reader, may wish to take a look at.)
I reckon he's shagging Abbey
...while she blows goats!
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