Crispin Odey bullish on Western equities. (FT 11th March 2011)
He said, “As of today, it means being very long of stock markets in Europe and the USA, and short bond markets. Most investors are now waking up to the fact we are in the midst of a global boom, taking key commodities very much higher.”
He said inflation may be painful in the developed world, bringing a fall in living standards, but it also meant a competitive convergence that would price people back into jobs.
“When that happens, inflation in the west will get out of control, but for now we have the best of all worlds: inflation rising, interest rates unlikely to rise immediately and an investment boom in its infancy,” added the manager.
PBOC Committee member against RMB appreciation (China Daily 10th March 2011)
Li Daokui, a member of the central bank’s monetary policy committee, said ‘faster yuan appreciation may not be a good tool to offset imported inflation’.
“We are a very large economy and a huge importer of commodities; as soon as the yuan appreciation quickens, all the commodity suppliers are likely to raise their invoice prices accordingly. In the end, we still have to pay the price,” said Li.
China braced for social unrest (FT 9th March 2011)
“Perhaps the most significant disclosure from [China's annual National People's Congress] so far is that, in 2011 for the first time, China will spend more on internal security than on the military. Despite the choreographed calm at the Great Hall of the People, Beijing is braced for unrest. “
China’s inflation – we worry that China’s high credit growth would bring looming inflation risk and hence growing fear of hard landing.
(Business Insider 8th March 2011) “[Mahe] …As you can see in this graph, China literally allowed its money supply to skyrocket, compared to that of the U.S. or the eurozone, with annual growth averaging +17.4% between 1996 and 2008, which compares to +7.1% in the eurozone and +6.3% in the United States.
Above all, since the beginning of 2009, this divergence has actually widened, despite the Fed’s QEs and 0% interest rates, since Chinese M2 has been growing at 26.6% per annum (!), versus +3.5% in the U.S. and +2.3% in the eurozone.”
[Roche] …The US M2 money supply is simply not expanding anywhere close to its historical rate. The only country where the M2 money supply is seeing any sort of substantive growth is in China. And so it’s not surprising to see the combination of commodity hungry China and enormous money supply growth result in higher commodity prices.
Icahn to Return Outside Money in Hedge Fund (Dealbook, NYT 8th March 2011)
Carl C. Icahn is returning all outside money in his hedge fund, citing his reluctance to be responsible to investors through another possible crisis. “While we are not forecasting renewed market dislocation, this possibility cannot be dismissed,” Mr. Icahn wrote in a letter to investors. “Given the rapid market run-up over the past two years and our ongoing concerns about economic outlook, and recent political tensions in the Middle East, I do not wish to be responsible to limited partners through another possible market crisis.”
Jim Rogers continue to be RMB bullish (Business Standard India 8th March 2011)
[Que] Are you investing in other currencies? Which is your favourite and why?
[Jim Rogers] The renmibi is my favourite currency. China has a gigantic balance of trade surplus, and it is the largest creditor nation in the world.
It has a lot of things going for it. Clearly, a currency that can and will go up is the renmibi.
The Chinese are trying to hold it down now, rightly or wrongly. And, I think it is a mistake to try to hold it down. But, the renmibi is the currency that has to appreciate a lot in the next few years.
China at 60% Risk of Bank Crisis by 2013, Fitch Gauge Signals (Bloomberg 7th March 2011)
David Tepper believes “if the Middle East blows up, you can lose half your money” (Institutional Investor 7th March 2011)
Editing: Matthew Kwok
