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En voyage

There will be no way to test my theory that we need some sunny days in New
> York City for the NSYE to get back up. I am about to fly to South Africa via
> London and will not be able to continue to correlate the Wall St. to the
> weather.
> As I set off into the sunrise tonight, I'm not sure if we are in a bull
> market correction or the start of a reversal. My instincts are that we have
> more upward momentum than down in the present market. Yet the day to day
> action is:
>  99 bottles of beer on the wall, 99 bottles of beer, if one of those bottles
> should happen to fall,
> 98 bottles of beer on the wall, 98 bottles of beer, if one of those bottles
> should happen to fall,
> 97 bottles of beer on the wall etc.
> Note that narrowly fluctuating markets are usually poised for a switch in
> direction. Since the most recent action has been downward, that may mean a
> boost in stock prices. There are a couple of other reasons, not based on
> chart patterns, that also sustain my optimism.
> The glaring absence of major institutional players (and their volume
> business) in the recent runup of stock markets here and elsewhere is a
> harbinger of more money flows into equities. Once the market starts to pick
> up again, there will be embarrassed buying from fund managers who missed the
> post-March rise.
> International matters. I will be able to check out the degree to which the
> world is getting ready for a synchronized recovery on my trip. I think we
> need a more generalized move upward in demand, consumption, employment,
> lending, government support than we have seen to date. I am optimistic about
> the message getting out.
> What is holding back the authorities, mostly in Germany, a key player with
> much influence in Europe, is fear of inflation. But when production is in a
> slump, the risk of inflation (pushed by shortage of goods or labor) is less
> than normal. That is why all that grousing about the printing presses behind
> the stimulus packages (in the U.S., Britain, China) are more about politics
> than economic analysis.
> Moreover, there has been a lot of deleveraging, saving, and debt repayment
> by consumers in the U.S., Europe, and Britain. This ofsets the increase in
> debt by government. I am not sure what is happening in other countries: in
> fact I doubt if the authorities themselves know in the
> Brazil-Russia-India-China nexus.
>  A further note about BRICs. The talk of a new currency block is nonsense,
> as I have written for a while. It is clear that diversifying out of the
> dollar makes sense for these countries. The trouble is there aren't many
> alternatives. Probably the likeliest solution is the IMF's funny money, the
> exchange-rate mechanism, or ERM,.and more holdings of gold in official
> reserves. Yeah, sure, gold yields no interest, but buying a lot of garbage
> U.S. equities and hedge funds produces a negative return.
> My own assessment of BRIC blah-blah-blah is colored by my having visited
> Russia less than a year ago. Whatever the brave new world
> of large-population developing countries brings, Russia may not be part of
> it. Firstly, it is not a developing country at all; it is a developed
> country getting out of the perverse impact of Communism and central state
> planning. Secondly it has a declining population, unlike Brazil and India,
> and not because of limits on family size (as in China, the 4th BRIC
> country.) Russian numbers are declining because people are dying young,
> especially men, from unhealthy life-styles, harsh industrial conditions, and
> awful climate.
> The numbers in Russia are also not very upbeat. To be sure, after a 72%
> decline in the RTS stock market things are up again. How could they not be?
> But inflation is high, about 13 or mroe percent. And unemployment is
> officially already 9.5% and probably unofficially much higher. The awfulness
> of stagflation already applies in Moscovy.
> Russia suffers from high levels of corporate debt some of which the state
> will take on in order to get back the levers of power. The system is pretty
> corrupt but probably not more so than that of other BRIC countries or
> Illinois.
> The main thing helping keep the country going is the popularity of Vladimir
> Putin, mainly because Russians think the oligarch mafia won unfair advantage
> in the privatizations, and Putin is clobbering them and taking over their
> debt and assets. Popularism plays well not only in Russia.
> Moreover, controlling the press and television doesn't hurt. The prosperity
> of Russia is the main Putin boost and that, in the end, depends on a high
> price for oil and gas, matters outside Russia's control. So at this point I
> am out of the Volga Basin altogether. Except for a meatpacker stock in the
> Global Investing Pro portfolio.
> As I go to England, I note that the dollar seems to have frozen in its
> recent rise against sterling and the euro. I may not do well on the forex
> market. Luckily, I have a bank credit card which does not charge for foreign
> exchange, a privilege from HSBC Bank.
> The notes for subscribers follow:
> *The Russian meatpacker is Cherkizovo which has a GDR created by JPMorgan.
> It used to be trackable on their ADR site but has dropped off. I still own
> it. It trades in London as CHE. The unhealthy Russian lifestyle depends on
> eating too much meat.
> *Baja Mining trades in Toronto as BAJ. Yesterday it published a report by a
> British Columbia lab on its manganese produce at Bolea in Bja California,
> Mexico which apparently says the output can be refined without using
> selenium-a. This is good news from a metallurgical point of view and the
> stock is up.
> *ICICI Bank's new CEO Chanda Kochhar told reports that the bank will be
> focusing on mortgages going forward. "There are a lot of youngsters who can
> afford hous and have not bought hous" she told an Indian reporter. IBN also
> hopes to boost infrstructure loans to corporations and car loans. The
> increase this year will be 24-5%, she said. I think the Hinglish was by the
> reporter rather than by Kochhar, but who cares?
> *Crucell will buy from Xcellerex a flexible bioproduction factory to produce
> using single-use bioreactors monoclonal antibody products. Price paid to the
> Mass. seller by the Dutch buyer, CRXL.Q, was not disclosed.
> *Compugen  is moving to the Nasdaq Capital Market from the main Q. Ticker
> remains CGEN. The move is not important. It is Israeli, a developer of in silico platforms for drug discovery and pre-trial toxicity indicators.
> * Reply to reader regarding Wuxi Steelpipe Holdings, a Chinese market of oil
> and gas drilling pipe who wants to know if it is still a buy.  WH remains a
> cheap energy play in p/e terms at under 6 times earnings.Note that its
> recent rise was linked to the oil price, an international phenomenon. So you
> can wait for an oil price drop before buying or decide that it will not
> happen. I cannot predict the oil price these days.
>