Posts Tagged ‘United States’

China, Japan…and US

Posted: November 27, 2013 in Uncategorized
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The US flew two unharmed and old B52 over the disputed Chinese/Japanese islands as a sign that the Asian Pivot Strategy it is here to stay.

The Chinese did not react, but it is a clear sign of open escalation.

The more worrying signs are others….much less evident.

The US is starting to redeploy its military bases to unused old “WW2” including India in order to be able to be less prone to a Pearl Harbor style attack  initiated via Chinese missile attack.

This issue will make it easier for Japanese PM Abe to push for a full re militarization of the Japanese forces.

Again we are very far from a war, but accident can happen:

– Drones are very easy to fly to the target and so to get shot down

-Both Chinese and Japanese air forces have very limited combat experience (vs the US) and someone can get trigger happy or simply have an accident (in 2001 a Chinese jet fighter collided and crashed while trying to intercept a US surveillance aircraft)

So tensions are bound to increase.

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A Syrian deadly chessgame

Posted: August 27, 2013 in Uncategorized
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Obama bluff has been called and there will be war. And there will be death. Americans will be again seen as heroes and ruthless killers at the same time.

Obama last year declared that a gas attack would be a clear red line because he thought Assad was not so stupid to conduct one.

What really happened, nobody will know. has it really been staged by rebels to provoke an attack (smartest move from rebels on a verge of defeat- but they do not seem to have the weapon delivery systems to conduct such an attack – US “Mission Impossible” kind of spies? Difficult – Saudis spies….that could have a chance). Was it Assad? He is not stupid…I do not think so. What I think (and it is of no consequences) is that some rogue part of the Syrian Army (Assad’s bloodthirsty brother or  some Iranian proxy) did it.

As a famous Italian comedian, Pirandello,  says ” It is so (if you think so)”.

The reality is that the Obama’s bluff has been called and war will be. Otherwise Iran and North Korea and anyone else (Russia, China) will know that their own red line do not exist.

Obama clearly does not want “boot on the ground” and has delivery weapon systems to proceed with “stand off attacks” (attacks carried from outside the Syrian airspace). 4 US Navy Destroyers are already in place. Strategic bomber can attack from bases in the UK and Saudi Arabia and the US 5th Fleet with two supercarriers are less than 48 hours away. There is at least one nuclear sub around there.

Thursday the UK Parliament has been urgently recalled.

What Syria (and its allies) can do. Syria has a good air defense system, but very limited offensive capacity (specially considering that they cannot risk to “disturb” also Israel. Iran can be a nasty surprise probably asking Hezbollah to attack/kidnap Westerners in Lebanon. Russia has already played its card with Snowden.

So it should be limited. But war is war. And oil and gold will start running again (well they already started) and the market will have its own (overdue) correction.

A word from Gavekal – Asian markets manager

Posted: August 27, 2013 in Uncategorized
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Louis Vincent Gave, manager of Gavekal Asian Opportunity is one of the most interesting manager to listen to. And he is worried.

There is a clear dichotomy between the Emerging Markets and there are only three potential reason/outcomes

 

1 The first is to say that the tailwinds to the Western economies (shale gas, robotics, ultra-easy monetary policies, fiscal and
regulatory policy visibility…) are just so strong that the valuation gap between emerging markets and developed markets
can only accelerate from here. In this scenario, one would want to continue buying developed market equities at the
expense of almost anything else.
2  The second is to say that, if developed economies really start growing as fast as Western equity markets are increasingly
starting to discount, then one should not worry too much about a China slowdown. Instead, one should use the recent sell-off
in EM growth stocks as a terrific opportunity to increase exposure to Asian and emerging market equities on the cheap.
3 The third, and more worrying conclusion would be that, while emerging markets are rightly discounting a growth slowdown,
developed markets are not, probably because of the excess liquidity created by central banks. However, if/when the spigots
get tightened and/or growth in developed markets is unable to build on the recent momentum, then the valuation gap
might close not through a re-rating of emerging market equities, but a de-rating of developed markets.
It is this third possibility that has GK worried today. Indeed, with a US economy approaching “stall speed” (whenever US GDP and US
industrial production growth fall below 1.5% YoY, the US economy has always experienced a recession), with growing uncertainty
regarding US monetary policy, with the threat of partisan budgetary battles looming once again in Washington, with Southern Europe remaining stuck in a deflationary bust… a number of factors pushed GK to reduce the overall risk across most of the actively managed GaveKal funds in July. This was obviously not the best immediate decision and helped contribute to the past month’s under performance.

So there are two outcomes …or he is wrong or he simply acted to early. This kind of dichotomy is statistically 70% associated with a crisis.

As of me, my personal scary month is mainly September and part of October – I am very traditional guy indeed 🙂