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Asia's Dependency


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#1 wndysrf

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Posted 23 May 2003 - 03:19 PM

Anybody see these ridiculous “predictions” out of Bloomberg about what Asia is going to do the next trading day? It’s like a broken record. Stocks “may gain” due to wild future expectations of a resurgence in demand from the U.S. Economy, the Criticial Lifeline for all industrialized countries.

Billions of Speculative Capital. Billions of Market Capitalization. All hinged on Al Green's Magic Wand being able to jump start the U.S. Vacuum Cleaner, ready suck up everyone's exports.

Any hope of a rebound, recovery, bounce, or pop in the U.S. economy stirs the loins of all foreign speculators. What happens in their own country doesn’t even matter. Japan’s own internal demand could totally collapse into a Black Deflationary Hole and it would have no effect on stock prices.

The only thing that matters is The U.S Economy.

Here are some excerpts from the Bloomberg news tape, showing how hopelessly the rest of the world is dependent upon the leverage U.S. Consumer to continue his wild borrowing and spending habits:

Tokyo, May 22 (Bloomberg) -- Japan's Nikkei 225 Stock Average may gain, led by exporters such as Toyota Motor Corp., on optimism the yen's drop against the dollar will boost the value of their overseas earnings.

Federal Reserve Chairman Alan Greenspan said the U.S. economy is poised to grow faster, notwithstanding recent "disappointing'' employment and production reports. Greenspan told Congress that forecasts for the world's largest economy to pick up speed in the second half are "not unreasonable.''

Toyota, the world's third-largest automaker, gets 80 percent of its operating profit from North America. The company's American depositary receipts closed at the equivalent of 2,682 yen for each Japanese share, which ended yesterday at 2,665 yen.

A weaker local currency raises the value of dollar- denominated sales. Every 1 yen drop in the currency against the dollar raises Toyota's operating profit by $200 million.

Japan Airlines System Corp. and other carriers may advance. The government said it will provide emergency loans to the nation's carriers, whose sales have slumped after the war in Iraq and the outbreak of severe acute respiratory syndrome.

New Zealand's Top 50 Gross Index rose 8.31 to 2021.53. The Top 40 Index added 0.4 percent to 1993.91.

Fisher & Paykel Healthcare Corp., New Zealand's largest medical equipment maker, gained 0.9 percent to NZ$10.80 after it said full-year profit rose 17 percent because it increased sales in the U.S. and had a one-time foreign exchange gain.

Asian stocks may rise, led by exporters such as Nissan Motor Co. and Samsung Electronics Co., after a U.S. survey of economists boosted optimism that growth in the world's biggest economy will accelerate in coming months.

"It's clear that exporters are a better place to invest your money,'' said Atsushi Osa, who helps manage the equivalent of $99 billion in assets as a fund manager at Sumitomo Mitsui Asset Management Co. ``Should the U.S. economy see stable growth going forward, exporters will see profits improve.'' Osa said he favors shares of exporters than those of companies that rely on domestic sales.

Elsewhere, Taiwan's TWSE Index advanced 1.1 percent, led by companies that rely on overseas sales, such as Hon Hai Precision Industry Co. Australia's S&P/ASX 200 Index rose 1 percent, led by News Corp., which makes three-quarters of its sales in the U.S..

The U.S. economy will expand at a 3.6 percent rate in the second half of this year and for all of 2004, according to the National Association for Business Economics. That would be the fastest since 2000 and more than twice the 1.6 percent pace during the first three months this year. The association started the outlook survey in 1965 and conducts it four times a year. In testimony to Congress earlier this week, U.S. Federal Reserve Chairman Alan Greenspan said a recovery in financial markets and gains in productivity "augur well for the future.''

Japan's Topix index gained 1.2 percent to 825.95. Carmakers and computer-related shares accounted for a third of the index's gain.

Kyocera Corp., Sony Corp. and other computer-related shares also advanced after the Nasdaq Composite Index in the U.S. recorded gains.

Canon Inc. added 2.1 percent to 4,800 yen. The maker of Eos cameras gets 70 percent of its revenue from overseas.

Japan ships a third of its exports to the U.S.

Sony added 3.3 percent to 3,010 yen. The maker of Vaio computers gets about 67 percent of its sales from overseas, mainly from N. America.

Samsung Electronics, the world's biggest memory chipmaker, which gets about a fifth of sales in the U.S., climbed 2.2 percent to 306,500 won. LG Electronics Inc., whose exports account for more than 60 percent of total sales, rose 1 percent to 40,300 won. Hyundai Motor Co., whose exports account for more than a half of its total sales, gained 1.8 percent to 28,000 won.

"We may expect some good sign on exporters as the U.S. is giving optimistic outlooks on its economy, signaling that the rest of the world may follow it,'' said Lee Hye Rin, a market anal cyst at Kyobo Securities Co.

The TWSE climbed 40.77 to 4312.07. The Taiwan Futures Index rose 1.2 percent to 4292. The U.S. is Taiwan's second-largest export market.

"A recovery in the U.S. economy provides a brighter outlook for Taiwan's exports in the second half of this year,'' said Simon Chao, who manages $17 million at President Investment Trust Corp.

The Straits Times climbed 0.7 percent to 1314.24. The benchmark's futures contract hasn't traded yet. Singapore ships about a fifth of its products to the U.S. and a recovery there will help boost the island's exports and lift companies' earnings.


...................

No real comment on the market today.

Same old story. Huge ramp jobs, Giant Gap Ups, perpetual Motion Chasing.....

....................

Where will the huge rally in BOND.COM lead us? Boom or Bust for the mortgage companies??

Is everybody hedged?

All derivatives working properly?

Are the Black Holes Price Models correctly reflecting the current bond.com hysteria?

What if the mortgage companies start turning upon each other?

Here's evidence. Note how FRE was sliding again today:

NEW YORK, May 22 (Reuters) - A Freddie Mac (FRE) conference call late on Wednesday did little to convince investors the mortgage finance company will stem the flow of borrower refinancing that threatens to erode its bottom line.

Because Freddie Mac, which buys mortgages and packages them into bonds it sells to investors, is facing higher refinancings than its competitor Fannie Mae, investors are less interested in Freddie Mac bonds, which is shrinking its market share.

In the call, Freddie Mac said it was taking measures to slow the refinancing, like buying more loans that are less likely to be refinanced. But judging by trading in financial markets, investors are for the most part not buying it.

"Everything Freddie Mac says it's doing to improve their bonds, it's all smokescreens," said Kevin Jackson, a mortgage bond strategist at RBC Dain Rauscher in Chicago.

With mortgage rates at their lowest levels in at least four decades, home owners are continuing to cut their borrowing costs by refinancing as they have for the past two years, leaving investors holding mortgage bonds with a headache.

Whenever a borrower refinances a mortgage that has been "securitized" into a mortgage bond, an investor gets that money back, and is forced to re-invest in a market where rates are falling.

Both Fannie Mae and Freddie Mac are dealing with heavy refinancing, but Freddie Mac has it worse because two of the biggest lenders it works with are aggressively encouraging borrowers to refinance. Fannie Mae works more with less aggressive lenders.

Freddie Mac aims to find alternatives to those two aggressive lenders, and if its succeeds refinancing may slow and market share, as the company predicts, may return.

Some anal cysts agree this is the most likely scenario, but others, like Jackson, think Freddie Mac is not addressing the real problem.

The real problem, Jackson said, is that Freddie Mac is keeping for its own portfolio the mortgages least likely to refinance, and selling the rest to investors.

"Freddie Mac is cherry picking. They take all the best mortgages for themselves," Jackson said.

NO SPECIAL INFORMATION

Freddie Mac says that its portfolio managers do not cherry pick, and have no information that isn't available to other investors.

It aims to stanch the flow of refinancing by working with a broader array of lenders, and buying a broader array of mortgages.

Another reason for the difference in refinancing speeds is that Freddie Mac's borrowers tend to have higher credit quality. Consumers with better credit tend to be more sophisticated about refinancing when rates fall.

Buying more mortgages that are of high credit quality, but lower quality than what it buys now, should help slow refinancing, Freddie Mac told investors on its call.

Whatever is driving it, the faster refinancing makes investors less interested in buying Freddie Mac mortgage bonds, and lenders less interested in selling to Freddie Mac.

Investors are paying less for Freddie Mac mortgage bonds than for mortgage bonds Fannie Mae offers.

That appears to be cutting into market share. In April, Freddie Mac garnered 26 percent of the largest segment of new business, while Fannie Mae took about 74 percent, according to one anal cyst who requested anonymity.

In the fourth quarter, Freddie Mac estimates it garnered 41 percent of new business.

If market share continues to decline, portfolio growth at the company could be hurt, which could influence earnings.

As its bonds become cheaper, investors will buy them again, and lenders will step up their selling to them.

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#2 Slothrop

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Posted 23 May 2003 - 04:16 PM

Finding weak stocks is key here: WTW broke down today -- one of my favorite shorts.

#3 RockLedge

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Posted 23 May 2003 - 04:20 PM

Refinery capacity is way down,.... gasoline prices falling going into the holiday weekend.

We are swimming in jet fuel.....

Nuts? :P

#4 The End

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Posted 23 May 2003 - 04:29 PM

Either way the E wave count reads, it tells me down to 900 minimum next week.

http://www.capitalst...=ST&f=17&t=2623

Still short and smiling. :grin: B) :wink2:
NONE of what I type, should be taken as financial advice.

And when you loose control, you'll reap the harvest that you've sown
And as the fear grows, the bad blood slows and turns to stone
And it's too late to loose the weight you used to need to throw around
So have a good drown, as you go down, alone
Dragged down by the stone.


--Waters

#5 Tchaikofsky

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Posted 23 May 2003 - 04:29 PM

The major markets edge up ahead of the holiday weekend, but claim losses for the week.

Despite the lackluster trading in the broader market, there was some stock-specific action.

"Even though the averages themselves are doing nothing, there are some special situations going on here," said Donald Selkin, director of research at Joseph Stevens. "There's a lot of action away from the averages."

======================

Action, indeed. Check out the Asian Exotica "Crushed Velour" Internet Riverboaters for today:

SINA, 14.69 up 4.77%
SOHU, 24.48, up 7.51%
NTES, 29.70, up 9.03%

#6 wndysrf

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Posted 23 May 2003 - 04:46 PM

SINA, SOHU, NTES

Shooting fish in a barrel. Perfect "ABC" ups indefinitely.

Each "pump" to the upside has more volume than the last time.

I expect these will be at $100 by the end of the summer.

No pullbacks.

CHINA not far behind.

Once again, the easiest stock market trading of all time.
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#7 FeedFool

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Posted 23 May 2003 - 04:58 PM

Insiders are selling because recovery is coming and are really happy with the Performa earnings. Insider must be dumer then Sir Toilet paper.

Sir Toilet paper business is the only business, which is booming.

#8 wndysrf

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Posted 23 May 2003 - 05:05 PM

I guess this time it IS different.

Sentiment remains pegged, unable to roll over.

Looks like the McClellan, Summation, and BPI's have turned back to the upside.

Sentiment

MSFT stochastics and money flow are turning up, as well as most of the other big cap techs. Too many have been shorting, expecting a blast to the downside.

MSFT

As long as the 50-day remains over the 200-day, and the trend stays intact, the bulls remain in control.

Picking shorts in this environment will be difficult. There are exceptions to the rule, like WTW, HDI, etc. Better money to be made by looking for longs, especially natural gas, golds, oils, etc.

Avoid the pain.

Avoid shorting.
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#9 TheMotleyStool

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Posted 23 May 2003 - 05:06 PM

There will be a "strong second half recovery" until warning season next month. Don't count on any stock market decline until the companies lower second half guidance. The equity bulls are too stupid to listen to the insiders or the bond market or the economic data, they will keep living on lies, hopes and dreams.

June draweth nigh. First one to sell makes the most money, the second makes 90%, the third makes 80%....

#10 wndysrf

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Posted 23 May 2003 - 05:18 PM

Hong Kong and Japan now out of their down channels.

Probably a good buy....

Global Indices

Thanks, Cardiff, for the heads up......
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#11 PileDriver

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Posted 23 May 2003 - 05:20 PM

US buck...look at the weekly, its perhaps accelerating into a crash :lol:

http://stockcharts.com/gallery?$USD

Hey, maybe it will.

Meanwhile MTV Spring Break continues unabated and in full swing...I love it.

Here sheepie sheepie, keep filling up the vat with sucker money so I can tap into it...silly fools! :P

#12 FeedFool

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Posted 23 May 2003 - 05:23 PM

Is it going to be different this time?

Link

#13 PileDriver

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Posted 23 May 2003 - 05:26 PM

Is it going to be different this time?

Link


You mean indicator not work this time?

If so...only if monkeys start flying out my butt and the world is now suddenly flat :lol:

#14 Tig 'Ol Bitties

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Posted 23 May 2003 - 05:32 PM

Vacation ends Monday and selling begins Tuesday from what I know. Enjoy it while it lasts.

#15 wndysrf

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Posted 23 May 2003 - 05:40 PM

Great Avatar, Tig!!

Looks like The Matrix is actually taking on a life of its own.

Even Da Boyz are getting short squeezed to death, evidenced by last week's OE debacle which caught them on the wrong side of the trade.

Now that its Memorial Day, it is officially that time of year for The Hamptons.

But things are not so rosy.

Except for the Structured Finance crowd, the rest of The Street is suffering, hurting the rental market:

Read about it here....

http://quote.bloombe...efer=news_index
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