Friday, March 19, 2010

Macro Themes & Political Issues from Around The Globe (must read going into the weekend) $SPY

Europe facing a commercial property "timebomb" - Europe faces a commercial property debt timebomb
with almost €1 trillion (£896bn) outstanding from the sector and a quarter of that potentially distressed.
London Telegraph.

China – U.S. Trade War - China is closer to a trade war with the U.S. than any time in the last five years as
the two trade barbs over the proper value of the Chinese currency, according to CS economists. Bloomberg

China growth rate – The World Bank urges China to cool its growth rate - China Quarterly Update, the
World Bank raised its forecast for China's economic growth this year from +8.7% to +9.5%; the report
signaled that China should use rate hikes and a stronger yuan to avoid asset bubbles and inflation. WSJ
Analysts continue to warn China is in a bubble - China is in the midst of “the greatest bubble in history,”
said James Rickards, former general counsel of hedge fund Long-Term Capital Management LP. Rickards
said China has the most massive misallocation of wealth and the bubble is waiting to burst. Rickards joins

HF manager Jim Chanos, Marc Faber, and Harvard University professor Kenneth Rogoff in warning of a
potential crash for China’s economy. Bloomberg

China and Germany – Chermany – Although China and Germany are very different from each other, both
are the largest exporters of manufactured products and have massive surpluses of savings over investment
and huge trade surpluses. Issues arise for surplus countries such as Germany and China such as
disruptions in Eurozone and US protectionism. FT thinks both sides needs to adjust because if disruptions
occur, the surplus countries usually lose out. FT
Spain pushes for faster bank consolidation – The country wants its weaker banks to consolidate;
Spanish finance minister admits that nearly 1/3 of the nation’s banks could face “solvency problems.” FT

Latest healthcare poll – On health care, while the measure remains unpopular w/the country at large, it is
still popular w/some core Democrat constituencies, meaning several who are on the fence may find it
politically advantageous to vote in favor of the legislation. For the nation as a whole, 48% calling it a "bad
idea" and 36% viewing it as a "good idea" when presented with a choice between those two. Away from
HC, Republicans have a major enthusiasm advantage at the moment heading into the ’10 mid-terms. WSJ

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