1. Who’s got the cleanest (balance) sheets?
Whoever controls the strings to the coin purse, wears the pants in the house. And it is a fact that women control 80% of household finances.
Which practically makes my kind, hermaphrodites; oscillating between the domestic roles of Sexy Short-skirt Susan and Hard hat Harry.
“More credits, less debits” in the household budget wins the approval of the credit bureau… ironically. Nations are not immune to this judgement either. The lesser the imbalances (deficits), the stronger the domestic demand. And between Europe, US and Asia (including Chindia), it is the latter who has the strongest sovereign balance sheets.
2. Growing strong
Sniffing the trail left behind by past GDP, unemployment and a whole host of other economic data, leads us to the wellspring of higher growth this year – Asia ex-Japan (expected growth rate 7%).
3. Too much money floating around?
2009 was a year of easy access to excess liquidity, with Uncle Sam prescribing medicine to the ailing US economy by pursuing a close to zero interest rate policy (ZIRP). With US macro and labour market data firming up, some exit strategy by the Fed is expected, sometime mid 2010.
In the Asian region, money was growing faster than nominal GDP. Forex reserves are also creeping up to pre-crisis levels in most Asian countries. And with asset (especially property) prices at sky-high levels, it is about time normalization occured.
If the People’s Bank of China (PBOC) takes steps to tighten monetary policy, the impact would be positive for the USD but negative for the EUR, as European exports (relative to Asia), into China will fall.
Taking the SGD as a proxy to the Asian region: the Monetary Authority of Singapore (MAS) is expected to pursue an appreciation policy in April 2010.
This suggests that the EUR/SGD pair may be trending down, as you can see from the chart:
Nations whose monetary policy tightening schedules are likely to be timed alongside that of the US, for example, USD/SGD may see short-term upside to their currencies.
Disclaimer:
I would be more than delighted if you participate with comments and better still, analytical provocations.
However, please do not rush to plough your precious GOLD ingots into investments based on my observations.
thangdynasty is a work-in-progress maintained by an accidental equity trader whose brief foray into the world of investments turned out… not so brief.
Although unmotivated by the senseless pursuit of money in and for itself, she remains sadistically intrigued by the complex anatomy stealthily at work behind the whole spectrum of Markets – Fine Art, Financial, Fish and Fools.
A budding art collector and supporter of emerging artists, she slogs to prevent collateral damage to her bank account resulting from occasional manic art buying sprees.