BOJ 2% Inflation Target

Abe, the new prime minister coming in announces an inflation target for the central bank, would that work?

BOJ people must be careful, once their own people get angry as bond yields fall short of inflation by a wide margin, this may trigger selling of bonds on a wholesale scale which would pull up interest rates long and short term, giving corporates much harder to maneuver their long term debt position or simply running into financial losses because of higher interest rates. Corporations large medium or small might not be able to survive on higher interest rates and tighter credit conditions, the failing of which will lead to even higher unemployment - in other words recession again.

2013 Dow vs HSI, CRE, Crying wolf Crying foul

Crying wolf, Crying Foul

In hong kong, we heard from our HKMA head mr yam or mr chan in 2008/2009 that we should think twice before buying an apt, now we still hear the same from mr chan. Both had been crying wolf for so many years that layman does not know whether they should continue to abide by their advice.

Those who did not heed his warnings already reaped major benefits from big ben’s QE and would not mind hearing some noise from him. But those who heed his warnings are crying foul since without some physical assets in hand, your cash is losing their value while your living costs have gone skyrocketed plus the cash in the bank has no yield which is the major headache for many people.

This is why you should never heed officials’ advice without giving some serious thoughts behind it since officials are like stock brokers - it is always time to buy stocks while for officials it is always time to be cautious, at their angle only.

Commercial Real Estate

Here in hk, we might be coming to a wall for CRE although the BSD and SSD in the residential market is driving investors to invest in CRE and car parks, but recent vacancy in CRE which could be spotted in busy districts like CWB, TST and MK and drop in demand from mainland tourists is a forewarning that difficult times are ahead for CRE owners or landlords. A recent visit to a realty broker for only half an hour, there are already two landlords one residential who wants to sell his apt [even under SSD period] and one commercial who wants to sell two units. In such a short period of time, you can say it is coincidence that two are coming in to sell their properties or the market has turned the corner if not for a long while at least for the short term. In a slow market, if certain landlords have cash flow problems and would want to sell into the market with limited buyers, only below market prices will complete a deal. Such landmark prices can set a precedent for the market to follow and will only drive more buyers away which could set the market up for even lower prices.

However it is not all gloom and doom, my hunch is this is a short reprieve for the real estate market to relieve some pressure which is not bad. This is more like a 1994 set back which is a prelude to the final rally of 1997.

2013 Dow vs HSI

In the past, dow has outperformed hsi, would that change in 2013 – likely, why?

Dow’s chart has a rising wedge formation which points to a serious correction while hsi chart has a round bottom extending for maybe a year or more which is more solid.

Bernie Madoff Letter to CNBC

downloaded from CNBC


A number of you have been asking my views on a couple of subjects that I am comfortable in going on the record, because they are not related to my case. there for(sic) the following are remarks that you are free to use for whatever value you feel are appropriate.
The issue of electronic trading has recently been focusing on the lack of transparency of the markets with the emergence of DARK POOLS.
This has now spread to the recent acquisition of the NYSE . While I have always been an advocate of electronic trading due to the efficiency the lower costs they bring o the markets, I am nit (sic) a fan of the lack of transparency the DARK POOLS create.
It is important to examine why there has been this growing interest in the use of dark pools. Markets have always focused on the speed with which information becomes available. Of course this information can be composed of various types.
It could be corporate developments like earnings or mergers or it can be information regarding the placements of buy and sell orders and who is placing these orders. It is the latter information that has created the interest in the dark pools.
Institutions have always attempted to guard this buy and sell information from exposure to the market for fear of being FRONT RUN. Certainly they are entitled to have this right of confidentiality.
This being said, the more secret this information. The more valuable this information is to those that can obtain it. Therein lies the problem. It is naive to think that there will be no leakage of this information.
Although one would be lead to believe that with the recent spate of Insider trading prosecutions, that insider trading is a new development. This is false. It has been present in the market forever, but rarely been prosecuted. The same can be said for front running of orders.
The other area of discussion involves the growth of hedge funds, particularly feeder funds. In spite of the early held belief. of which I was of this opinion, that the extra layer of costs related to commissions and profit sharing that went along with feeder funds.
They have continued to grow. It has been this additional layer of costs that have created the need for more risk to be taken to earn worthwhile returns. This has created a minefield of regulatory problems involving the very reasons that the desire for a lack of transparency has grown.
Both of these areas are going to be the greatest challenge that both the industry and the regulators are going to face .

Read more: http://www.cnbc.com/id/100338795#ixzz2GE48ymuB

DOW, APPLE, GOLD and the ECONOMY

click chart for a better view.

apple chart has a typical head n shoulder formation, it wont be long before it falls deeper, read this blog on earlier discussion of the final settlement pricing of apple. there could be some struggling usually at the neckline 520 which has now been broken. if apple stays below 500 for three weeks or more, not a good sign.

the dow is also not looking to reach new highs above 14000 given the formation of a rising wedge which can bring dow down much harder, the pullback has already occurred, thus it is not likely to go up much higher.

economy will go slower no matter fiscal cliff or not as it will cut into consumer spending one way or the other, this is why there is such a rush to QE to avoid economy contracting too fast once it is over the cliff or a deal is struck to limit expenses and raise taxes.

gold prices is telling the same story that even current QE cannot sustain prices above 1700. it usually is a precursor of the price of oil, it has done poorly for the past few months, my hunch is oil will fall further and gold may go down with it.