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Tuesday, 11 August 2015
Buffet's Deal Turns Market Sentiment; While Global Chaos Persists, & More Top Insights
Investors" Insights Comments
Markets were momentary inspired by Buffet’s latest blockbuster deal and shenanigans that turned over the downward sentiment of the past seven trading-sessions. But the old guy in
Omaha is not the world, and the real
world could actually care less about what Berkshire
did, does, or doesn’t do. Markets, however, being collectively neurotic by nature,
care for short time spurts - that is until the next trendy thought or event
captures its child-like focus and limited imagination – thus the game goes on..
A brief review of the real world concludes that there is little to be exuberant about. In addition to
and perhaps the rest of the Eurozone, along with other nations, all account
for many top Western economies who are in critical
distress. Some are near terminal. Meanwhile, bad debt at Chinese banks continues
to accelerate, as expected, Resource economies are seeing exports drop for
commodities. Australia’s coal industry
is now on the watch list ; so is Norway’s oil industry. Bonds for the Eurozone are now paying
negative returns, indicating that there are no “Real Economy “investments for notional
capital. Italy ’s
consumer confidence is dropping faster than a hockey’s player’s gloves in a big-game fight , each month. Japan ’s
GDP fell sharply, by 4.5%; it is getting hammered by both sanctions and resource issues. Russia too is
lowering market yields. Taiwan Brazil,
Venezuela, , and no doubt many more
South and Central American countries, are basket-cases. Then there is the Mexico and its
Slovak and Eastern European neighbours, who are all experiencing hardships. Ukraine
Still, an even bigger concern are countries in the Middle East, South Asia and Africa, where the economic optics are limited, distorted or non- existent, but one may conclude with confidence that given the extent of wars, starvation, medical deprivation and extra-ordinary waves of migration to less-marginal neighbouring countries, that most of these economies are also terminal cases with little hope of recovery to sustainable levels for their indigenous populations. Overpopulation is thus rampant everywhere.
In the meantime, most folks in North America are getting poorer, since 2000, as “The Tale Of Two Charts” ndicates below - and more importantly, they do not participate at all in the real GDP growth. It looks much worse too, as per capita incomes are going backwards while drowning in the temporary relief from more debt at all levels, to keep a broken consumer consumption system hobbling along. Pensions and medical services are also in peril in both developing and developed countries.
So indeed, markets may be neurotically happy for a brief moment enjoying the usual relief reactions, despite what is plain and clear to object analysis and evaluation. Meaning, the iceberg’s damage has but one inescapable conclusion – so what the heck, why not rearrange the deck chairs with Uncle Warren, while having the ship’s band play merrily along - once more?
Knowing that in the end, reality is a cruel mistress - who promises wide-spread currency wars (devaluations – already
Japan, …), and
trade protectionism with its consequential and expanding global conflicts! Australia are suspects
Good Luck; Be Careful Out There!
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