The Market Perspective

Advertisements Reflect the Mood

Monday May 23, 2011

Reading WSJ online deprives one of the advertisements, and the ads say as much if not more about social mood than the news. Anyway on the full back page of section one today page A 22 is an ad touting a company that explains itself as follows....

'which is  why millions of mutual fund investors rely on our strategic expertise and risk management experience to help their dreams come true.'

Okay now multiple choice question,  this company would be

New York Life

Northwestern Mutual

USAA

nah, who wants the advice of  stdogy insurance companies that stay out of trouble, this would be

Goldman Sachs

As comedians Dave Barry and Jeff Foxworthy like to say, you just can't make this stuff up. Two years ago GS went hat i hand to the Federal Government and Warren Buffet begging for capital. Buffet got the sweet deal, a fat 10% preferred stock and millions of call options with a strike below what the stock traded for even then  Rescued from near oblivion, the market has now doubled, and GS wants to sell you mutual funds with stocks trading at rich 20 to one multiples and about 2.2% dividend yields on major indices. Gee where were these ads in March 2009,  oh that's right, that is when GS took the Government Bailout money and the QE I money and bought the market themselves, now it is time for you to buy. 

This is truly incredible, With the VIX at all time lows, that would be the complacency index, Wall Street hypes mutual funds just as HBO debuts Too Big To Fail tonight on television, another full page ad.Thanks for an alert marketperspective reader for bringing that to my attention. 

Politics

On Page A 14, Vote Jars Spain's Ruling Party, 

The revolts across the globe are not so much right versus left as a universal statement against existing rule, everyone in office is facing unrest as Angela Merkel can tell you. This parallels the experience of the 1968-1984 timeline, no US President survived, period. That is when the shift away from the Democrat Party began, at the end of that period. 

The Dollar

Page C2, Gloomy Reports Aid Dollar's Run. We are betting on bonds and the US Dollar, Wall Street is betting on Macau. We have featured graphs of the Dollar holding near three year lows as negative reports called it the world doormat. Gee how things change. 

By the way see the interview with Steve Wynn on page B 5. Hmm, are the reporters at the WSJ reading themarketperspective, they copied my headline, Doubling Down in Macau!

Macau

I am betting Paulson and Kerkorian are wrong on 

MGM China.  China is at the top of a speculative boom, The Shanghai Stock Exchange continues to sell off having topped months ago, MGM is as we showed this weekend awash in junk debt, and nothing collapses in a downturn faster than the taste for casino gambling. 

Remember 1999, remember the Number One Growth City in the USA at that time, it was Las Vegas. My neighbor at my Lake House in San Angelo, TX  at the time was working construction in Vegas, such was the demand for electricians. Now of course Vegas and Nevada is the poster city for foreclosures and economic collapse. You could substitute Las Vegas for Macau in the  story on page B5 from a 1999 newspaper. Amazing that Steve Wynn does not see the similarities. Oh well....

For an excellent look at what Macau and Vegas used to be there is no better travel source than

Ian Fleming's Thrilling Cities.  Fleming wrote for the London Sunday Times and penned a Bond novel once a year while on vacation in Jamaica. The book is forty years old, written when most Westerners had never heard of Macau. 

Real Investment in Real Infrastructure

Sunday Jan 22, 2011

 

An alert reader sent this article which I reprint below. My thoughts are as follows.

 

The Chinese are marter than the Japanese, instead of going to war they will create a Greater East Asia Co Prosperity Sphere by building literal routes to China. Gee what an irony and another point to make in my letter, as Franklin said, honey works much better than vinegar. I  put the photos linked on on my student blog of the Chinese RR system and terminals, amazing, we of course still do not have a train from San Antonio to Austin to Dallas, ridiculous. Instead we are paying people not to work by extending unemployment benefits, maintaining all sorts of government offices that produce nothing whatsoever other than regulations, the Energy Dept is a good example, and doing it all on borrowed money, from the Chinese that they made manufacturing goods for us as we have no interest in doing so. 

China’s Vision for Integration with Southeast Asia

The Thailand and Chinese governments are about to sign a “memorandum of understanding” that will lead to the building of an important new rail line and within three years allow introduction of high-speed train services between the Chinese city of Kunming and Bangkok via Vientiane in Laos.

Currently there is no rail connection between China and most of Southeast Asia. The new line, whose construction will begin soon, will be the first phase of an ambitious Chinese plan to give its economy fast, high-capacity rail access to the region, using Bangkok as the hub of a major new system.

Later stages will replace the obsolete narrow-gauge track that currently links Bangkok to Singapore via Malaysia with a standard-gauge connection carrying trains running at up to 350 kms an hour. Then will come new rail routes to Bangkok through Vietnam and Cambodia to the east and through Burma to the west.

The new network, financed by cheap Chinese government money and equipped by China’s fast-expanding railway equipment industry, will not only open up the region to Chinese factories, but also give Southeast Asian economies much easier access to Chinese markets for their exports of agricultural commodities, natural resources and manufactures, and encourage inbound tourism.

The Chinese vision is even grander. The Beijing government wants improved access to Europe through high-capacity over-ground access to ports on the Indian Ocean and planned rail links from Northern China through Central Asia and Russia.

Within a few years it could take as little time as two days to travel in comfort by train on an unbroken journey all the way from London to Singapore.

With trade among Asian countries growing twice as fast as their trade with the rest of the world, there is fast-growing need for improved intro-Asian transportation links.