The Next Big Crash - Are You Prepared?

Thread Rating:
  • 2 Vote(s) - 3.5 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Warns of 'Abegeddon' Risk in Japan
INDIA, INDIA, INDIA, INDIA, INDIA, US DOLLAR / JAPANESE YEN FX SPOT RATE, BUSINESS NEWS

CNBC.com | Wednesday, 5 Jun 2013 | 1:14 PM ET


Japan risks facing stagflation - where accelerating inflation is not met by higher growth rates - if "Abenomics" fails to restore momentum in the world's third largest economy, warned Alex Friedman, chief investment officer at UBS Wealth Management.


"It's possible we could see a stagflation scenario, where you see inflation in asset prices but no real growth. The ultimate story is you need a hand off to real growth - in Japan there's a real question of whether that's possible," Friedman told CNBC Asia's "Squawk Box" on Wednesday.


(Read More: Consumers Still to Buy Into Abe's Economic Experiment)


"If you don't have growth, then you end up with a potential Armageddon story, something we would call Abegeddon," he added.

In an "Abegeddon" scenario, Friedman said investors may grow increasingly concerned about the sustainability of Japanese debt levels that could lead to a "stampede" out of government bonds.


(Poll: Does Abe's 'Third Arrow' Go Far Enough?)


Under these circumstances, Japan's debt to gross domestic product ratio would rise above 300 percent from 226 percent currently, and the 10-year government bond yield could approach 5 percent, he predicted, from 0.86 percent.


"This would damage the financial system significantly, and regional bank capital would be severely impaired," Friedman added.


(Read More: Relax, Sign Points to Eventual Rally in Japan Stocks)


Prime Minister Shinzo Abe's radical policies have thus far stoked a rally in equity prices, with the benchmark Nikkei 225 rising 44 percent over the past six months. Inflation, meantime, is beginning to show up in the economy, with consumer prices in Tokyo rising for the first time since 2009 in May. A weak yen, which has depreciated 22 percent against the U.S. dollar over the past six months, could also lead to imported inflation. The Bank of Japan has set an inflation target of 2 percent to be achieved over the next two years.


On Wednesday, Abe unveiled the keenly-anticipated long-term growth plan to get the world's third largest economy on track.

The wide-ranging plan includes pledging to raise incomes by 3 percent annually over the next decade and set up special economic zones to attract foreign investment.


Short Term Outlook Less Bearish

It will take years before the success of Abe's policies can be fully judged, said Friedman, noting that the worst case scenario he outlined is unlikely to play out in the coming months.

"With inflation likely to remain close to zero, we do not expect a stampede out of the bond market: any short-term sell-off would likely be met by temporary Bank of Japan stabilization measures," Friedman said.


(Read More: Market Strife Puts Japan Policies in a Flux)


"We are keeping a small overweight position in Japanese equities over our six-month horizon as we monitor the potential changes in long-term dynamics closely," he added.


By CNBC's Ansuya Harjani

© 2013 CNBC.com
Reply
Brace yourself for another sea of red tmr...US, come on, dun disappoint me!!

http://www.cnbc.com/id/100790842

"In the U.S., markets will focus on Wednesday's ADP (Automatic Data Processing) employment report as a pre-indicator of Friday's nonfarm payrolls numbers. Jobs are a key metric for the Fed, and investors have been on high alert in case an improvement in employment data prompts the central bank to start paring back its asset purchasing program.

"This report has been considered make or break in terms of Fed policy. That's too strong a word, but the idea is it would go a long way toward shaping expectations on tapering," RBS senior economist Michelle Girard said Tuesday.

Analysts in a Reuters poll forecast the ADP survey, out at 8:15 a.m. EDT, will show 160,000 private sector jobs were created in May, up on 119,000 new jobs in April."
Reply
http://www.marketwatch.com/story/doomsda...genumber=1

so many people shouting bear

we shall see if bear or bull wins ^^
Reply
I am expecting STI to touch 3200 before rebounding. It can be an entry point.
Reply
(05-06-2013, 08:20 PM)Penguin Papa Wrote: I am expecting STI to touch 3200 before rebounding. It can be an entry point.



but still, picking stocks based on fundamentals is very important together with the decision to have a focused or diversified profile.
Reply
I still maintain that this is a complacency building phase for a penultimate bull run that will end in 2016/17.

The 1/3 retracement level on STI is currently at 3185 and 50% at 3050.

This retracement is essential to correct the uptrend that started way back in Sept 2011 where STI touched 2646 and topped 3457 recently.

GG
Reply
(05-06-2013, 08:29 PM)paullow Wrote:
(05-06-2013, 08:20 PM)Penguin Papa Wrote: I am expecting STI to touch 3200 before rebounding. It can be an entry point.



but still, picking stocks based on fundamentals is very important together with the decision to have a focused or diversified profile.

Yes, fundamental + looking for points for entries. For me, it's diversification. It is more suitable for my style.

(05-06-2013, 08:29 PM)greengiraffe Wrote: I still maintain that this is a complacency building phase for a penultimate bull run that will end in 2016/17.

The 1/3 retracement level on STI is currently at 3185 and 50% at 3050.

This retracement is essential to correct the uptrend that started way back in Sept 2011 where STI touched 2646 and topped 3457 recently.

GG

I maintain 3 figures: 3200, 3000 & 2500. Pretty close to yours. Personally I feel that humans like whole numbers, so I stick to that too.
Reply
May i use specuvestor's signature:-

It's not about who's right, it's about who's left. (i like)

So will you be still around another 5 years time? 10 years time? xx years time?

For me i am aiming to be around until the "Fat Lady Sings".

i don't want to get dementia.

Do you?
WB:-

1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.

Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.

NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
Reply
Specuvestor's signature:-
"It is not who is right or wrong, it is who is left."

Well, i am still around Smile
Probably the pioneer batch of internet traders,
Now who can remember Van Der Horst?(The spectacular rise and fall of it, and it is still around, under a different name)
But must admit, I not much richer from the stock market.
Reply
(06-06-2013, 12:34 AM)Big Toe Wrote: Specuvestor's signature:-
"It is not who is right or wrong, it is who is left."

Well, i am still around Smile
Probably the pioneer batch of internet traders,
Now who can remember Van Der Horst?(The spectacular rise and fall of it, and it is still around, under a different name)
But must admit, I not much richer from the stock market.

Thanks for remembering Wonder Horse. I am the analyst that brought the mad horse to its knees by revealing that their power barges ran into trouble in the Philippines. Peter Lim is the man that heralded the rise behind little known Indonesian Kotjo.

The CFO, Tan Ngiap Hong, was a good Teochew man that eventually went over to SMB and probably lasted till SMB was delisted.

VD Horse, L&M and ABR were the hot stocks towards the 97 Asian Financial Crisis, not unlike the China stocks fever towards 07 and the current Myanmar madness and alongside don't what type of punt in penny stocks.

GG
Reply


Forum Jump:


Users browsing this thread: 12 Guest(s)