Although I believe that there should be some more runs in this bear rally, now may be a time to start to be vigilant and set one foot out of the door (or the finger on the trigger) to sell the risk trades whenever necessary. The market indexes are already close to level that I […]
It is a little surreal that stocks were poised for substantial further gains after September. All the risk factors are there, and the warning signs getting louder. However, thanks to people like John Paulson, who are “naïve optimists” as phrased by The Wall Street Journal (see Paulson and the Bulls Bounce Back), and David Tepper, who is opportunistic in taking the Bernanke put, the market got back to life in September.
In the new world of globalization, a fashionable phrase after the financial crisis is, raising competitiveness. A lunch tale from my own experience exemplifies how catchy this phrase is. As the European sovereign crisis unfolded in April, I was having lunch with a large group of financial industry professionals, many of whom have master’s and Ph.D. degrees and at least a few years of experience in the financial industry, as well as CFA designations. At the time, the Greek sovereign CDS shot out of the roof, and our discussion inevitably touched on the crisis in PIIGS countries. The sentiment at the table was that these countries deserve to suffer unless they can raise their competitiveness through internal deflation, and that these countries are too small to affect the global economy, and we can just leave them alone.
While most of the developed world is pondering a possible double dip, China is in the seemingly enviable position of fighting excessive growth. Although some commentators are concerned about the quality of China’s growth, the overwhelming majority is charmed by its formidable growth. Then why should I fear for China?