{"id":700,"date":"2013-06-27T18:12:44","date_gmt":"2013-06-27T18:12:44","guid":{"rendered":"http:\/\/www.thebizsense.com\/views\/?p=700"},"modified":"2013-08-21T15:11:34","modified_gmt":"2013-08-21T15:11:34","slug":"view-on-us-emerging-markets","status":"publish","type":"post","link":"https:\/\/www.thebizsense.com\/views\/business\/view-on-us-emerging-markets","title":{"rendered":"View on US, Emerging Markets"},"content":{"rendered":"
\"Marc<\/a>

Marc Tenwick<\/p><\/div>\n

Worldwide, the average investment manager is extremely underweight in the energy, commodities and emerging-market sectors, according to the latest Merrill Lynch survey.<\/p>\n

This suggests most fund managers \u201cbelieve the low inflation\/deflationary pressures of the last two years will likely continue,\u201d says the Irish strategist Marc Tenwick.<\/p>\n

But he has found this survey to be \u201can excellent contrarian tool. Investment managers as a group have historically suffered from the same herd-like mentality as retail investors \u2013 they are overly bullish and overly bearish towards an asset at the wrong time.\u201d<\/p>\n

They were very bearish on commodities and emerging economies in December 2008 (wrong). And overweight in both sectors in April 2011, \u201cjust as these assets were peaking.\u201d<\/p>\n

Tenwick believes they\u2019re once again wrong in their negative view and will probably be \u201ccaught flat-footed as inflation starts to accelerate.\u201d<\/p>\n

The most successful investors are contrarians, who bet against the consensus view. \u201cToday the most unloved assets\u2026 are inflation hedges such as commodities and emerging-market stocks.\u201d<\/p>\n

Some other points he makes\u2026<\/p>\n

\u25ba American stocks: They\u2019re looking dangerously overbought. \u201cInvestors have poured every cent they have into stocks.\u201d This is \u201can ominous sign\u201d as current cash levels they have available at Wall Street firms are similar to those prior to the 2000 and 2008 stock-market crashes.
\nInvestors \u201care so optimistic about the outlook for stocks that they have even borrowed money to buy.\u201d Margin debt on the New York market has also reached peaks like those that preceded the 2000 and 2008 plunges.<\/p>\n

On the other hand the shrewdest big investors now prefer cash to shares. Warren Buffett has accumulated a cash pile of $49 billion \u2013 as much as he raised prior to the 2008 crash.<\/p>\n

\u25ba The dollar: Current sentiment is very bullish. In the past, that has often signaled peaks. And the second half of the year is typically a weak period for the greenback.<\/p>\n

Should the Federal Reserve surprise the currency market by maintaining the quantitative easing programme at current levels or increasing it, that would probably lead traders to sell the dollar, \u201cwhich would be a bullish development for commodities and emerging-market stocks.\u201d<\/p>\n

\u25ba Japan: \u201cThere is a high probability that the recent rally in Japanese stocks is not the start of a new long-term bull market and was merely a powerful short-term rally.\u201d<\/p>\n

\u25ba China: Despite well-known negatives, \u201cwhen compared to the highly-indebted, low-growth economies in Europe and the US\u2026 appears to be a far more compelling alternative,\u201d with economic performance that is still impressive \u2013 latest numbers \u201care not the signs of an economy that is facing a hard landing.\u201d<\/p>\n

Tenwick says (and this is also my view)\u2026<\/p>\n

\u201cThe Federal Reserve is in a conundrum.\u201d Its \u201congoing money printing has created a monster of a stock-market bubble that is not supported by economic fundamentals.<\/p>\n

\u201cIf they remove or reduce their QE programme, they are likely to burst the bubble, which could lead to a severe recession and even a renewed banking crisis.\u201d But \u201cif they continue with their monthly QE programme, they risk destroying the US dollar and creating an inflation surge\u2026<\/p>\n

\u201cPoliticians greatly influence the actions of central bank governors\u2026 The path of least resistance is to do more of the same \u2013 that is, keep printing money.\u201d<\/p>\n

CopyRight \u2013 OnTarget 2013 by Martin Spring<\/p>\n","protected":false},"excerpt":{"rendered":"

Worldwide, the average investment manager is extremely underweight in the energy, commodities and emerging-market sectors, according to the latest Merrill Lynch survey.<\/p>\n","protected":false},"author":1,"featured_media":702,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"amazonpipp_noncename":"","amazon-product-isactive":"","amazon-product-single-asin":"","amazon-product-content-location":"","amazon-product-content-hook-override":"2","amazon-product-excerpt-hook-override":"3","amazon-product-singular-only":"","amazon-product-amazon-desc":"","amazon-product-show-gallery":"","amazon-product-show-features":"","amazon-product-newwindow":"2","amazon-product-show-list-price":"","amazon-product-show-used-price":"","amazon-product-show-saved-amt":"","amazon-product-timestamp":"","amazon-product-new-title":"","amazon-product-use-cartURL":"","amazon_featured_post_meta_key":"","_amazon_featured_alt":"","amazon-product-template":"","footnotes":""},"categories":[1,8,3,112,9,52],"tags":[232,234,235,233],"class_list":["post-700","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-featured","category-investments","category-markets","category-news","category-usa","tag-contrarian-view","tag-emerging-markets","tag-marc-tenwick","tag-us","has_thumb"],"yoast_head":"View on US, Emerging Markets - 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