>Bits & Pieces

Interesting bits and pieces that I've seen this week at CLSA - 8 MAY 2009

What Me Worry? Yes i do when markets run as far as fast as they have - Asia ex-Japan is up 48% in two months (reminds me mid-2007's rapid >40% rise). Many Asian markets are above or close to their end September 30 2008 levels, the point from which they then cliff dived to lows. Valuations have also recovered to the point where no Asian market is trading below 10x PER (although we could be facing earnings upgrades which may change that overnight). How much higher can markets fly? I ran a few calculations based on previous dates and prices, while Laurence balano senses the potential for a melt up. Yet i still feel we are far from out of this mess despite the parade of supposed green shoots.

"We note that the failure to make more substantial downward progress has to be recognised as a bullish development and as such we believe the risk of a melt-up type advance is great" Technical wizard, Laurence Balanco.

"If i hear the expression, :GREEN SHOOTS" one more time I may throw up". US Trader, Ross Levin.

"Alternatively, there is still time-just-for another freefall leg, but timing is running out. Investor confidence is still fragile, and should we get a series of particularly shocking data points, which, in the unique position we find ourselves is quite possible (say, one out of three), the confidence could crack one more time and the market could go to a new low before the major anticipatory rally" GMO Chairman, Jeremy Grantham.

■ Fiscally challenged, CLSA's economics team highlihts the expansion of Asian budget deficits as expenditure rises and revenues fall. Interest rates as a result are likely to head lower - a positive for stock markets as money is now dead if it sits in the bank.

"Asian budgets deficits are deteriorating quickly. Deficits are set to double and treble over the forecast period to 2010" CLSA Economics team.

■ Plus
■ Volumes on a tear - Taiwan close to "boom time" highs
■ World equity markets regain US$8 trillion to the US$35 trillion they "lost"
■ Get confident, stupid- consumer confidence charts show an uptick but still in doldrums

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