Masters Of The Universe

I loved He-Man though my favourite cartoons were Thundercats or Mask (that I still think Transformers copied their idea from).

Abe as He-Man ?

“What we want is for wages to rise more than prices,” Abe
said in an interview in the prime minister’s official residence
in Tokyo. “We want to enter a virtuous cycle as quickly as
possible,” where economic growth propels corporate profits,
employers raise compensation and workers spend more, he said.

You see, when you are the master of the universe, you really have to control everything and you would want to mold things to your goals. Just like the Fed. And when you get what you want, you sometimes cannot let go because you really don’t know what will happen if you do.

Abenomics has made the country shun JGBs and whilst they are supposed to indulge in Capex and active lending, the folks are just shifting their money to Thailand. And Thailand is allowing this temporary aberration of protests to let the folks release some pent up frustrations before winning the public referendum (because Thaksin is still the favourite of the majority).

Singapore’s little incident called a riot last night has all but given some “live” training to the police force and perhaps future laws for electronic tagging ? Everything under control.

The macro theme is a perky one with strong momentum building up for a sustained rally with risks of above trend growth globally next year. Labour shortages will fuel wage growth and consumer spending is showing no signs of slowing. North Asia is looking very strong with Korea and Taiwan ruling the smart phone world. Rest of EM will have to ride on the wings of the DM world.

Hongkie Babe, my good friend in Hong Kong, was telling me that there are suspicions that the recent Chinese trade surplus numbers are due to “over-invoicing” again and that her view is that Abe’s 3rd arrow is very weak and looking tough to implement.

Who cares ? As long as the headlines are rosy and even if the arrow fails, there is a 4th arrow to look forward to.

The FOMC is coming up on the 19th where the true masters of the universe will gather, as John Mauldin describes as, “We have 12 men and women sitting in a room thinking they can manipulate an economy with data they don’t truly understand and that they can’t actually measure with tools they’re making up as they go along.”

Reading through this week’s strategies, I do not think many are willing to commit into anything. A bit of CHF strength, EUR confusion to continue, USDJPY all the way to 110 now and equities, with really no target anymore because the sky is the limit.

Special mention on bonds which are seeing very strong support last Friday with asset allocation switching into bonds from equities and the Japanese who never say die.

There is certainly a mad rush to rally.

But if we think like the masters of the universe, you would need to remind everyone that you are still in control.

I still have those S&P shorts so I have decided to do my own Xmas baking this year and roll out my own fruitcakes.