Hunger Games Is Catching Fire In Thailand And Elsewhere

That they are releasing the sequel to the Hunger Games, Catching Fire, at a time when President Barrack Hussein Obama’s approval rating has dipped to an unprecedented 39% low in his presidential tenure is quite unfortunate on the 1 year anniversary of his re-election.

http://www.washingtonpost.com/blogs/post-politics/wp/2013/11/05/poll-obamas-approval-rating-dips-below-40-percent/

The NSA spying scandal earlier this year and the recent Iran backdoor deal makes the world feel a little more vulnerable for it.

Merkel Says Germany Mustn’t Pile Up More Debt: “We have a responsibility to our children and to our children’s children’’

By Patrick Donahue
Nov. 25 (Bloomberg) — Chancellor Angela Merkel says new government will maintain objective lowering state debt load.
• “We have a responsibility to our children and to our children’s children,’’ Merkel tells labor union conference in Frankfurt
• Merkel cites 80% outstanding debt load to GDP, target of 60%
• “Despite the great urge to invest’’ in infrastructure, government must also lower debt: Merkel

At the same time …..

Nov. 25 (Bloomberg) — European Central Bank Governing Council member Ardo Hansson said the ECB stands ready to cut borrowing costs further and is technically prepared to make its
deposit rate negative.

Policy makers are considering whether charging banks to hold their excess cash at the ECB would spur them to lend it to households and companies instead, bolstering the recovery in the
17-nation currency bloc.

There are 2 realities in this economic recovery as evidenced in headline news I read yesterday, ironically (or deliberately) placed close by for a subliminal effect, I suspect.

1. Hungry Americans Less Productive as Budget Cuts Deepen: Economy
http://www.bloomberg.com/news/2013-11-25/hungry-americans-less-productive-as-budget-cuts-deepen-economy.html

2. London Luxury-Home Building Accelerates
http://www.bloomberg.com/news/2013-11-25/london-luxury-home-construction-accelerates-as-price-gains-slow.html

Thai protesters have stormed the various ministries and I am hearing unverified news that they have manage to break into the military base. It suddenly feels like Egypt again and if I were a law keeper, it would be hard to shoot at the family and friends out there.

I wonder if they have watched the Hunger Games too ? It is a common theme which everyone identifies with. For my son, who introduced me to the book, and his friends, it is a common teenage anti establishment concept. Adults compare to the ages of the Roman tyranny during their reign.

For an observer like me, it is the middle class squeeze, Foxconn workers, Bangladeshi garment workers and so on.

Is it true that inflation is falling ? The only thing deflating is wages.

When the employment-to-population ratio moves up, more labor is available for production, which adds capacity, reducing pressure on price. Inflation leads to unemployment. Per capita investment is needed to provide stability in prices or wages will have to increase. This is true of developing countries.

But we can see signs of inefficient capital flows happening because the rich are more interested in capital preservation, slow to invest in capital expenditure and keeping wages low. Who can blame them when some countries are so young and their elected governments so impermanent ? Thailand has had a history of coups so its not unusual and if I am a rich Thai, I would try and buy FNN for all my wealth.

Trading Themes

1. More populist measures to come which means capital investment will continue to slow.
2. US Treasuries have now become more volatile than Spanish and Italian bonds because they cannot Taper when Obama is down.
3. Merkel austerity will lead to unhappiness as foreigners continue to outbuy the locals (foreign capital continue to flee their own home countries).
4. EM will continue to be wrecked with political uncertainties leading to stable Singapore being the safe haven for the region.
5. Capital will be dislocated going ahead with economically irrational behavioural motivators.
6. More political diversions coming up with Indonesia burning Australia’s flag and Malaysia summoning Singapore envoy on spying claims. http://www.bloomberg.com/news/2013-11-26/malaysia-summons-singapore-commissioner-as-spying-claims-widen.html

Trades

I wrote When Doves Cry – Crisis of Confidence 2013 in December last year. I was wrong about gold and agriculture but I was right about the USD strength, tech bubble and bonds.

The only trade now is to put your money where your mouth is and to stop pretending to be what you are not. If you believe in say, UK real estate and that GBP is the place to be, then no one can fault you but if you are buying UK real estate because you do not want to be left behind and because your friends have bought, it is a different story to tell your children.

I do not believe in equities and I turned short the S&P 500 yesterday, like I said I would and I am also long Gold. Bonds will be the casualty of war and liquidated to plug losses.

We are seeing a new spring in the markets and human psyches are starting to reject all that is going on.

It is surely a sign when the first quote of the day I encountered when I logged on is this one.

“There is no weapon more powerful than the human soul on fire.” Ferdinand Foch