Tuesday, October 05, 2010
TMM are back from the weekend and for those of us who look at all things EM, and particularly Asia, there isn't much to say except that we are seeing more of the same. The Hot Money Shuffle (unrelated to a similar-sounding Rolling Stones song) is in full effect: "Fund Flows YTD flat to China? Get me a stick of HSCEI. Indonesia busting through all time highs? Call in the
The question is "Where does it all end?". Even the great and good of investing like Jeremy Grantham are calling for an EM bubble and to date we're well on track. All the hallmarks of a great bubble in Southeast Asia are here: hard to borrow stocks, poor-ish liquidity in futures for some markets and valuations which are getting toppy, but as it's hard to call a turn there are few sellers apart from insiders. All the more, TMM are having a hard time identifying the fatal flaw here - as much as many of us are natural contrarians, it's never a good idea to step in front of a bus if you're nowhere near the bus stop. Readers are welcome to suggest how this all ends out here because we are out of ideas.
Instead, we leave you with yet another compelling bull market case for Asia, this time in Airlines. TMM is not alone in complaining about airlines in the US and Europe, and after seeing this video of a Cebu Air flight safety demo we feel entirely justified in doing so. If you look on Bloomberg, the company is pending listing, leading some to the logical conclusion that this is a killer viral marketing campaign. Despite TMM's fairly bullish views on oil and particularly Tapis its hard not to buy in - airlines are 80% macro risks and 20% marketing and these guys seem to have the latter down pat: Which is more than we can say for JetBlue.
And finally, to the title of our post... TMM has to hand it to the French, handing Jerome Kervial a EUR 4.9bn fine and five years in jail. He must be thinking to himself "Sacre Bleu! I should've waited to write my book until after declaring bankruptcy". We are referring Mr Brown's Gold trading to the same court hoping for a similar punishment.