Monday, September 15, 2014

Westpac Exec:Why a Market Correction is in the Making

We're setting up assuming Sydney will become a renminbi trading hub,said Rob Whitfield,Group Executive of Westpac Institutional Bank.The November G20 meeting is absolutely an incentive to a free trade agreement with China.A China slowdown would slow down the economy.It would certainly affect our performance.*
I do see that we will really see a significant,meaningful asset price correction.Credit spreads are narrow,forcing a move by many into higher risk assets.Junk bond yields are at all time lows.Asset bubbles are emerging as share markets have posted successive record highs in recent times despite tapering and mixed economic results.It is my view that the current environment is ripe for a market correction that both looks and feels like what we experienced in 1994.At that time,US Treasury bond prices plummeted,causing the Fed to raise rates,which resulted in higher borrowing costs and a market correction.
Such an event need not freeze the credit markets this time the way the global financial crisis did,however.The financial system has been reformed since then.
The failures that perpetuated the recent crisis today no longer exist,Mr.Whitfield pointed out,and our ability to withstand shocks is much stronger.*
There's massive risk on the Scottish independence vote.A lot of the uncertainty has been priced in.Certainly there are lots of signs we've started to see a sea change with the US dollar,a big divergence between the US and the rest of the world.A lot of ugly ducklings are out there.It filters through the Federal open market committee on Wednesday-more event risk.There could be a lot of dollar-buying across the board,and Treasury-selling.If Fed chair Janet Yellen surprises it,the market will feel very disappointed.*

Monday, September 8, 2014

Words of the Day:Cybersecurity,Antitrust and Alibaba

I'm paranoid enough that I get a new credit card every three months,said Ken Westin,Tripwire security researcher.I'm guessing at least one or two retailers a week are going to be coming out with an announcement.I'm expecting to see more shoes drop.
I think the Home Depot hackers are a much more sophisticated group than those that hacked Apple's iCloud accounts of celebrities.Odds are,they're operating outside the US.Once those credit cards get exfiltrated out of the US to Russia or Eastern Europe,it's almost impossible to follow up on the investigation.*
Microsoft has an antitrust law problem in China.Their office was raided by Chinese authorities in July.This is pretty serious for Microsoft,said David Evans,Vice President and Chairman of Global Economics.It's not clear what exactly the allegations are.The full array of claims I don't think we know at this point in time.I think the point is,it's a law that was passed in 2008.This is a baby antitrust law.It's really a very new thing in China.This is actually very quick for China to be taking the law so seriously and acting so aggressively.*
Alibaba,the Chinese Internet titan,has valued itself at 162.7 billion dollars prior to its initial public offering on the New York Stock Exchange later this month.Alibaba will announce share pricing on September 18 and go public the following day.Its publicity roadshow begins at the Waldorf Astoria in New York today,followed by two weeks of meetings with prospective investors.
Alibaba has spent 4.6 billion dollars on 2014 deals.There will be questions about this M&A strategy,as profit margins are crimped when a business expands too rapidly.The company also has an ownership structure that is not investor-friendly.Investors have less of a say in big company decisions than they would like.
It does concern me,says Jeff Sica,founder and president of SICA Wealth Management,because transparency is clearly one of the clouds on their horizon.The top question is,is Alibaba going to be able to operate under the standards of the NYSE?*
Microsoft(MSFT,Home Depot(HD),Apple Computer(AAPL)

Wednesday, September 3, 2014

Shop Talk-September 3,2014

Dear Readers,
I have taken some time off while I relocated to the state of Pennsylvania from Maryland.Thank you for your continuing interest.
It is now meteorological autumn,but it has been wickedly hot in the Mid-Atlantic region.By Sunday,it will be cooling off,however.The light will change.
I wish you all a great autumn or spring,as the case may be.
Andrew Taylor