Christopher Wood Op-Ed in The Wall Street Journal - Controlled Greed Investor

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Christopher Wood Op-Ed in The Wall Street Journal
Oct 27, 2009 09:51 PM UTC

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Via CONTROLLED GREED.com:

Today's Wall Street Journal runs an interesting piece by Christopher Wood of CLSA Ltd. in Hong Kong. This is up on RealClearMarkets.com, so it should be available to non-WSJ.com subscribers.

Wood, you may recall, was recently interviewed in Barron's. And he pens a newsletter called Fear & Greed, which I'm told is only available to clients of CLSA. Now back to the linked op-ed:

Happy days are here again in world stock markets. Yesterday's
profit-taking notwithstanding, the Dow Jones Industrial Average is
flirting with 10000 and the S&P 500 is up 60% from its March low.
Still, if risk-seeking behavior has returned to financial markets, much
of it is funded by borrowing increasingly cheap U.S. dollars. There is
also very little evidence, if any, that consumption and employment are
really recovering in America.
With the U.S. government stepping in
to keep markets from clearing, today's U.S. economy in many ways
resembles the post-bubble Japanese economy of the 1990s. Ultra-loose
monetary policy and low demand for credit, combined with high
unemployment and consumer deleveraging, could lead to a prolonged slump.

A bit further down:

Meanwhile, there's an unhealthy reliance on government for growth in
America's increasingly command-driven economy. This is clear from the
severe slump in car sales post "cash for clunkers." U.S. auto sales
declined by 35% month on month in September to an annualized 9.2
million. It's also clear from the enormous role now played by
government in the residential mortgage market. Government-guaranteed
mortgages accounted for 98% of total mortgage-backed security issuance
in the third quarter.

And, finally, this interesting bit:

The next bubble in asset markets will not be in the West but in
emerging Asia, led by China. The irony is that the more anaemic the
Western recovery proves to be, the longer it will take for Western
interest rates to normalize and the bigger the resulting asset bubble
in Asia. Emerging Asia, not the U.S. consumer, will be the prime
beneficiary of the Fed's easy money policy.

The next asset bubble in emerging Asia? That's something to keep an eye on. And perhaps benefit from. If I keep some powder dry.

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