US Investment Views 3 Nov

Asia

Asia markets were largely up except China as we are waiting for the Fed’s big decision. HSI +2.00%, SHSE -0.47%, S&P/ASX 500 +0.45%.

Hong Kong market is going really crazy today without much apparent reason. Today’s land auction result in Hong Kong was way worse than expectation (and here I offer explanation), but the property companies trade in Hong Kong have taken no hit.

World Bank today raised its forecast on China economy, but were concerned about inflation and asset bubbles (as much as I am!). Perhaps that is the reason why China drops today as investors thought the government will do more tightening. Though it is unclear why the Hong Kong market, which is rather dominated by Chinese companies, went crazy today.

Europe

European markets are up, again because investors are waiting for the Fed’s big decision. In the UK, the services sector grew unexpectedly in October, which is a good news for David Cameron and George Osborne. Also, RBS (RBS.L) wants to sell assets to Mitsubishi UFJ (8306.T). Perhaps the Japanese Bank wants to take advantage of strong Japanese Yen (?).

US equities preview

Before talking about anything else, this absurd headline came up from Bloomberg TV: Freddie Mac is asking treasury to borrow US$100mn from the Treasury in order to pay dividend to the Treasury (What?).

US futures are little move after the election day. Now we are in a gridlock, with the House of Representatives lost to the GOP and the Senate remains to be Democrats. No one seems to have clear idea on what this will really do to the economy.

Private sector is adding some 43,000 jobs according to ADP, better than expected. Today, the Fed FOMC will announce rate decision. Market expects a total amount of QE2 of $500 billion. In a separate article, I wrote that the Fed is actually running out of ammunition, and what they can do now is just to do more of what they have done. It did not work last time, and I am not optimistic that it will work this time. The US dollar could take a hit, and stocks and risky assets may still go higher if the markets are happy about the amount. Of course, there would be reasons why markets are going to correct after QE2, no matter what.

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About Zarathustra

Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.