Enzio's Clock

News of the day

·      US CPI remains low, except for oil and petrol prices. This means that the action has to be in credit risk, not in inflaiton risk.

US data - US - CPI, Industrial output out tonight - how do they fit into

your overall growth outlook for the US? The implications for financial

markets and the challenges that remain

·        The general Economic Time® is characterized by an

o       Excess demand for money, and by an

o       Excess supply of goods

·        Of course, Prof. Bernanke has to tell everyone that all is well economically - imagine what would happen if he said the opposite!

·        Of some concern is that August's wholesale prices rose by 1.7% - that is twice the rate of July.  While energy prices rose by 8% and petrol costs by 23%, the concern has to be that these price hikes will create multiplier effects or ripple effects in what we call "cost push" inflation

President Barrack Obama warned against cutting off government aid - what about Asia, should it be preparing its exit strategy as inflation risks picks up?

·        China needs no exit strategy; her stimulus goes beyond a mere "pick me up" in her business cycle. Indeed, her social unrest suggests far deeper undulations than merely those caused by the business cycle

·        On the whole, the threat of inflation has to be weighed against maintaining the export competitiveness of Asian products. So foreign exchange rates

·        I hardly think that Asia needs to prepare for exit strategies, given that her Economic Time® is characterized by an excess supply of goods. This means that demand-pull inflation will remain low for a long time.

The MSCI Asia Pacific Index has climbed 64 percent from a more than five-year low on March 9 - share valuations vs fundamentals - how big are

the imbalances?

·        The imbalances are huge - and worrying

·        Indeed, it is precisely these imbalances which investors sense - and that is what has been driving down volumes in Asian markets

·        Indeed, were Asian investors to feel that the Economic Clock® were foretelling wonderful times ahead, more of them would be buying stock.

·        At present, it seems more like the autumn of an investor's market, not the spring of a bull marke

   Investor sentiment and liquidity in Asian markets.

o       This excess supply of money is what has been driving primarily the Chinese, but also the other Asian markets

o       Add to this the global dimension of investors being happy about the relatively stronger growth prospects in Asia, and the story is complete as to why Asian markets have trounced Western markets in terms of stock market performance.

         Any topics you like discussed

-         It does not seem like anything is being learned from the Lehman collapse: bank concentration has risen

-         Hiding behind the taxation of bonuses is another way of just passing the buck and not addressing the real issue at hand: how to make bankers live with their financial creations by extending the lives of bonus payouts

-    The recent U.S. move to limit tyre imports from China smacks of low-down protectionism which the Chinese must retaliate against, courtesy of their own domestic politics.  All of this protectionism is based on anachronistic ways of measuring trade balances; in fact, America's MNCs have created a global trade surplus of USD 3 trillion for her, as I emphasise in my latest book!