Mad Hedge Fund Trader

Robust Asia, Weak U.S., Even Weaker Europe

yyt Fed chairman Ben Bernanke say the recession is “technically” over. This will be great news for the people living in the tent city under short finals who I fly over when I land at Buchanan airport. It means “technically” they will eat tonight. It will also be welcome to the 18% of the workforce who are now unemployed in California, the 1.5 million who are losing unemployment benefits in the next three months, and one million college students who ran up and average $30,000 in debt to graduated this year so they could sleep on their parents’ sofa. Traders celebrated the news by running the S&P 500 up to 1,054, a positively nose bleeding 58% above the March 9 low. Apparently, the stock market thinks Obama is the greatest president in history, rising some 40% since the inauguration, compared to a 30% drop during the eight years of Bush rule. That is some report card. Too bad we can’t annualize that. The only thing I approve of today is that this love fest took silver to a new high this year of over $17. Wake me up when the party is over, and I’ll drag your drunken carcasses into the car and drive you home. Then I’m going to cash in a couple of my sliver dollars and take my significant other out for a Corona and some vegetarian burritos.

Asian Markets Reach a Five Month High

As they should. ) Legendary investor and former George Soros partner Jim Rogers gave a great interview to Bloomberg TV. Although he is a long term bull on China, he wouldn’t be adding to positions here because, having doubled in six months, you’d be jumping on moving train. China’s stimulus program is larger and better working than ours, as it is being entirely domestically spent. No subsidies for foreign car imports. Many industries are booming there, and real estate is going crazy again. The better play here is commodities, which the Chinese absolutely have to buy, especially the grains (see my call to buy wheat at www.madhedgefundtrader...). Jim is sop wedded to his china play that he has moved to Singapore to get closer to it. He has always been very public with his ideas, getting people to buy what he already owns, and widely propagates YouTube with his interviews. Take a look at his personal investment website at www.allthingsjimrogers.../.

Asian Markets Trade Mixed; S&P Futures Advance

Start discounting the next election. Japanese Prime Minister Taro Aso’s call for national elections on August 30 is setting up a potential “black swan” type event. His Liberal Democratic Party (LDP) has ruled for all but 11 months of the past 55 years. But his party’s 18 year effort to spend itself out of an “L” shaped recovery has failed miserably, succeeding only in converting Japan from the least, to the most indebted industrialized country. Think of a 1,000 “bridges to nowhere.” So the opposition Democratic Party of Japan (DPJ) has a real shot here, which has promised to fundamentally remake the economy by boosting social spending, canceling useless construction projects, and encouraging domestic consumption. Remember what a surprise Congress Party win did for India’s stock market? Look at the excellent piece from The Permanent Wealth Investor’s Martin Hutchinson for an analysis of how such an outcome could affect Japan on a stock by stock basis at www.moneymorning.com/2.../

Vietnam: Asia's Sleeping Tiger?

Good piece. If you think that the place where China does its offshoring would be a great investment, you’d be right. Vietnam has been one of the top performing stock markets this year, its index rising by an amazing 85%. It was a real basket case last year, when zero growth and a 25% inflation rate took it down 78% from 1,160 to 250. This is definitely your E-ticket ride. Vietnam is a classic emerging market play with a turbocharger. It offers lower labor costs than China, a growing middle class, and has been the target of large scale foreign direct investment. General Electric (GE) recently built a wind turbine factory there. You always want to follow the big, smart money. Its new membership in the World Trade Organization is definitely going to be a help. Remember what happened when China joined the WTO? Until now, the only way to get involved with this country was to go through the tedious process of opening a local currency brokerage account, or buy a region sub emerging market ETF. But now there is a vehicle to get in and out of this ultra emerging market easily, through the London listed Vietnam Opportunities Fund (VOF.LN), run by Vena Capital Management. I still set off metal detectors and my scars itch at night when the weather is turning, thanks to my last encounter with the Vietnamese, so it is with some trepidation that I revisit this enigmatic country. Throw this one into the hopper of ten year long plays you only buy on big dips, and go there on vacation in the meantime.

Economic Crisis Serves as Wake Up Call for Asian Export Market

As it should. Japan’s closely watched tankan report was released today, a quarterly report of business sentiment, showing its sharpest drop in history, cliff diving from -24 to -58. Japan is the one nation that has profited the most from globalization, and is therefore the most severely punished now that it is in retreat. Exports have dropped by half, industrial production plunged 9% in a month, and unemployment is soaring. Q4 GDP shrunk an unimaginable 3.2%, double the fall seen in the US. The last time the numbers were this bad, two atomic bombs had just been dropped on Japan and it lost WWII. Prime Minister Taro Aso’s government is embroiled in multiple scandals, taking his approval rating down to 23%, so the ruling Liberal Democratic Party’s half century long hold on power is in doubt. Elections are due in September. Perversely, a hurried unwind of a decade long accumulation of yen carry trades has pushed the yen up just short of a 20 year high of ¥87 in January, making the country’s essential exports even less competitive, and vaporizing the foreign earnings of Japanese companies. Toyota Motors (TM) has been reduced to begging for bail out money from the government, GM style. The government has passed four bailout packages in the past year totaling 13% of GPD, none of which have so far been spent. Japan has little choice but to wait for a US economic recovery, and then grab hold of its coat tails for dear life.