38,820

We are NOT “all doomed” after all because the Dow Jones Industrial Average will surge to 38,820 in an eight year “super boom” beginning in 2017. This is according to Jeffrey A. Hirsch, Editor-in-Chief of the Stock Trader’s Almanac. “All previous major economic booms and secular bull markets were driven by peace, inflation from war and crisis spending and ubiquitous enabling technologies that created major cultural paradigm shifts and sustained prosperity”. The Dow closed yesterday at 10,812, meaning it must more than three-and-a-half fold; albeit that this is only 10.3% per annum through 2023.......

Elsewhere Ken Fisher, the billionaire CEO of Fisher Investments, said the next decade will be as good for investors as the 1990s – as he eschewed the notion that developed economies face below-average growth. Fisher also said the concept of a “new normal” is “idiotic”, which puts him at logger-heads with Pacific Investment Management or PIMCO, which invented the term. Fisher also said that any revaluation of China’s currency against the dollar is unlikely to have a long term effect on investors. Nor would an upward movement create any new jobs in the US. “Those jobs are gone. The only question is, do they stay in China or do they migrate to Indonesia, Malaysia, Thailand or Vietnam? It’s total political nonsense, all the China bashing”.

Nobel Prize winning economist Robert Mundell agrees saying that US legislation to press China to raise the value of the Yuan would be a “disaster”. It would also fail to narrow the trade deficit between the two nations. The bill “would create a very damaging thing to the World economy and the stability of Asia” continued Mundell. “This would have a wounding effect on the stability of international relations. There’s never been any precedent in economic history where a country through any legal system was forced to appreciate its currency relative to another country”. (Note, too, there is also now a rumour circulating that US legislation on the Yuan may be postponed).

By way of support, Yuan Forwards dipped for the first time in nine days and point to only 1.8% appreciation over the next 12 months. Domestically, though, equities continue to fret about a property tax and siblings – and, perhaps, a hike in interest rates. I think the latter fear is erroneous and take comfort from the one year PBOC bill yield unchanged for 16 weeks at 2.0929%.

“It is the still, small voice that the soul heeds, not the deafening blasts of doom” William Dean Howells

Shanghai Composite:
Today: -0.63% at 2,611.35 at close
This week: +0.8%
YTD: -20.3%

Hang Seng:
Today: -1.03% at 22,109.95 at close
This week: +0.0%
YTD: +1.1%

Oil futures: $75.90
Gold futures: $1289.70
(new ‘immediate delivery’ high of $1,300.15 yesterday)
Euro/$ spot: 1.3458

Headlines

• China may retaliate against currency measures
• Chalco shares surge on its plan to invest in rare earths
• Buffett affirms support for China carmaker BYD
• China may allocate 30% of alternative energy spending to wind
• China to introduce tax break for alternative energy use
• Henderson achieves Hong Kong record of HK$60,000 per foot for an apartment
• Hong Kong developers may offer financing to counter Government restrictions