FT Beyond Brics - Hong Kong luxury sales. Some explanation for the dive in Hong Kong: maybe Macau is stealing business, or maybe the rich Chinese are just going to Milan now to buy their Prada.
Or, of course, maybe the rich Chinese don't want to ostentatiously advertise their wealth anymore, since it's obvious to all that it must have been gained through state corruption.
Bespoke - performance of S&P domestic versus international. This is a major tell of the market, and something more people should look at more often if they want to have a clue what the broad US and international economies are doing (Gary!). And the chart right now says domestics have begun under-performing versus internationals. Maybe cos the international slowdown has bottomed?
FT Beyond Brics - El Salvador and Mongolia: solid bet, or bubble? Me say bubble. Grossly stupid bubble. As if anyone in their right mind should pay a premium to own Mongol debt over Spanish debt! Also, I think this is yet another indication that the Age of Income is at an end, and we're about to switch back to the Age of Capital Gains. I.e., the bear market is almost over.
WSJ Marketbeat - China opening interbank gold market. Dunno what it means, but I bet goldbugs will spin it positively. Personally, I am quite scared of the idea that the grossly illiquid, highly over-leveraged, non-transparent, incompetent and corrupt Chinese banks now have the ability to dump gold on an open market if they ever get, say, financially stressed. Ticking time bomb there.
FT Beyond Brics - Russian consumers rack up debt. Oh good. This was especially funny:
“In Russia, the macro-economic risks are small,” says Natalia Orlova, chief economist at Alfabank, “But the risks in the banking sector are accumulating. Retail lending is becoming a high-risk segment.”It's usually the Russian men who are the ignorant fucking fools; but this time it's a woman. No macro risks to Russia? Really? So oil is going to stay expensive then? Nickel? Natural gas? Good luck with that!
Frankly the macro risks to Russia are catastrophic, because it's a resource-based economy. A hiccup in China will give Russia a fucking heart attack.
And here's my opinion about the common thread to the last three articles:
If you want an indication of the start of the next secular US equity bull market, according to people like Jim Rogers anyway, you need to see commodities collapse, bonds done, and the emerging markets fucked.
I really think all it'll take is a major economic screwup in China to do all of this. A China collapse (something Asian Tigers-like) would do the following:
1. Tank commodities, since the demographic/economic growth push on commodity prices is what's giving them a speculative premium;
2. Tank the developing world economies, most of which depend on commodity prices, probably destabilizing them in the process;
3. Tank most EM bonds per 2 above;
4. Drive labour utilization out of the developing world and back to the developed world, since obviously a company doesn't want to make their goods in a nation destabilized by economic collapse.
There are probably some effects that I'm missing, but I think that's the way the end of the equity bear/commodity bull will play out.
And if I'm right, that means the whole damn thing will get telegraphed to us, and we'll know well ahead of time that the big machine is turning. It'll play out over a while - a couple years maybe - but eventually that machine will turn.
I'm not saying that's where we are now. I'm saying that's the ultimate endgame, is all.