Thoughts for 2010 - Part (2) ..."Ten for '10"

Herewith 10 themes that we feel will be to the forefront of investment (and other) markets next year.

The background to this will be one of, we think, gradual recovery, albeit at a slower pace than markets currently seem to be hoping for. The sluggish pace will give grounds for occasional disappointments (especially on the unemployment front).

Having said that, there are some things that could throw this modestly benign prediction off track, so don't read the list below as being completely inter-related: some (such as points 1, 2 an 10) are obviously mutually exclusive).

(1) Interest rates: These will remain low, globally. We see no immediate end to quantitative easing and the liquidity support provided by central banks, even if the quantum of that liquidity support will be significantly lower. With unemployment remaining stubbornly high in the developed world, it is clear that central banks in these areas will be more accepting of some inflation rather than in running the risk of kicking off deflation by a too early tightening and liquidity withdrawal programme. So far so good. However, this leads us on to what we think is the Number One risk for next year:

(2) Bond yields: This is obviously a continuation of point (1), above, but a potentially far more negative one. Normally, with central banks leaving the liquidity taps on, bond yields could be expected to remain low. During 2009, the increasing supply of government debt appears to have been well absorbed by investors keen on eking out even nominal fixed income returns. However, as the supply of this government bond issuance rises inexorably, there is a big danger that investors will, quite sensibly, demand higher yields in return for the potentially increased default risk. Watch the rating agencies, if they start moving their focus from the periphery, currently occupied by Dubai, Greece, Ireland and Iceland to the centre, the negative implications for the rating of UK and even US government debt become more obvious. At this point, the possibility of a "buyer's strike" on new debt issuance could rise materially, as investors reject lower yielding new issues and force governments to issue new debt on terms which are more advantageous to the buyer. That means higher coupons, more attractive yields and a re-setting of the yield curve. If that happens, all risk assets could get re-priced to reflect higher funding costs, and will have a negative impact on everything from property prices (debt will be more expensive and harder to get) to stock markets.

(3) Stockmarkets: Assuming that point 1 continues to play out (interest rates to remain low), then we will continue to see investors increasing their risk appetite during 2010 as part of the quest for higher returns than are currently available on cash (miserable). This would be positive for stockmarkets. We think market leadership will move to the developed markets (notable the hitherto underperforming US) and to "growth" companies within that. This means a greater emphasis on stock-picking and actively managed mutual funds next year as opposed to pure index plays that have done well in 2009. Asia Ex-Japan and Emerging Markets will continue to do well, but the recovery story will be stronger in the US which is starting from a relatively lower base for both earnings and valuations.

(4) More bank capital raisings: The should have held back the bonuses. Banks will continue to raise more capital from investors in 2010, whilst praying that the commercial property sector will see some recovery, thereby reducing some of the balance sheet pressure for further write-offs.

(5) USD to surprise on the upside: We've been saying this for a couple of months now: we don't buy the USD weakness story. Whilst we accept that there are a whole host of reasons to be short the dollar, the same negative factors could be said to apply to most of the other major currencies: the Yen, the EUR, and sterling are hardly compelling value plays either. In addition, with European and Japanese exporters suffering from the relative strength of their currencies, and no Asian country being particularly keen to give the Chinese yet more of a currency influenced competitiveness benefit, the USD seems destined to recover next year.

(6) SGD to strengthen to $1.35: Although we think the USD will recover next year, we feel that the SGD will continue on its way to touch new highs of $1.35 by year end. Strong government finances and a bounce in export led growth will be supporting factors.

(7) Commodity prices: Although negatively correlated with the USD, we think stronger growth will result in a continued gradual recovery in commodity prices. Gold will rise to $1,300 and oil seems likely to add another 10% or so, both on the back of stronger demand.

And three other predictions for next year:

(8) US Politics: The Democrats will surprise everyone, including themselves, by increasing their majorities in both houses of Congress. Why? Because any US voter with a brain will realise that the nutty conservative right is just that: raving. Having these people exercise real influence over government will be just too scary a thought, even if the Democrats have had an undistinguished first 12 months.

(9) UK Politics: The Conservatives will be voted in with a narrow majority, and will realise the day after the election that the country's finances are worse than those of Greece. Where at least the sun shines.

(10) England will win the World Cup: Scotland's not playing this time round, so there's not much real competition. PJ's money is on Ghana.

Steve

e-mail: steve.davies@javelinwealth.com
contact: +65 65577185
website: http://www.javelinwealth.com
Javelin Wealth Management supports www.kiva.org, the global microfinance philanthropy initiative.

Thoughts for 2010 - Part (1)

We'll be taking the opportunity over the next couple of weeks to mull of our recommended strategy for 2010. As a background to this, we reckon that there are 3 key variables which will be the main driving forces behind markets next year - either up or down:

(1) Interest rate shock. These seem key. At present, with the liquidity taps turned on full, and the major central banks committed to keeping rates low for the foreseeable future the likelihood of an increase in rates during 2010 seems remote. There are however, two areas of uncertainty. The first lies in bond yields. These have been suppressed by the same liquidity flows and the almost indiscriminate way in which investors have been pursuing even modest yields at a time when cash and money markets accounts are returning close to zero. Our concern on this focuses on the fact that these liquidity flows can quickly reverse, particularly if investors feel that they are not receiving sufficient compensation for risk. Risk was underpriced in the run up to the crash of 2008, and markets fell sharply as that risk was re-priced.

How could this play out in the next year or two?

As we have noted before, there remains a vast amount of corporate debt that will be due for re-financing over the next 4 years. At the last count, it was $4.2tn, largely of speculative quality in commercial real estate and non-investment grade debt. Of course all this could be rolled over if markets continue to recover (the junk bond markets have been strong performers since their post-Lehman lows), but it will be interesting to see if investors ask for higher yields in return. If they do, then this will drag up interest rates across the board, no matter what the Fed does.

Importantly this move in interest rates, driven by an effective "buyer's strike" would occur inepdendently of any continued deflationary pressues elsewhere in the economy, should these persist, and would mean that you have rising interest rates and deflation: a toxic combination.

A buyer driven rise in interest rates will cause interbank rates to jump, thereby putting pressure on the refinancing of other forms of debt (consumer, mortgages etc.) which have been supressed in the last 12 months, giving some respite to those with excessive leverage.

If interest rates go up, then the attractiveness of higher risk investments such as equities and speculative debt will begin to pale, and the markets for these will fall. If this starts happening later on in 2010, markets could pull back quite sharply.

Likelihood of an interest rate shock in 2010 ? First half: 2 out of 10. Second half: 3 out of 10.

(2) Growth shock. There are some indications that the stimulus led recovery of the last 10 months is beginning to run out of steam: recent growth numbers in Japan, Australia etc. have disappointed. Whether or not these are "outliers" and that other economies will continue to grow regardless is, as yet, unknown. If growth slows, then the optimism that has supported markets over the last 12 months will flag as expectations of a V shaped recovery get pushed back. The only consoloation in this scenario is that although markets may dip on the back of such a "growth scare" it will ensure that interest rates will remain low for the forseeable future and that liquidity will remain in plentiful supply.

A growth scare could, we think, provide a good buying opportunity.

Likelihood of a growth scare in 2010 ? First half: 6 out of 10. Second half: 4 out of 10.

(3) Earnings. Weve been saying for a while that for the market recovery to be sustained, corporate earnings growth needs to move from being cost-driven to revenue driven. So far, cost cuts have bossted margins and offset the impact of sluggish sales. However, costs can only be cut so far without having a negative impact on the long-term potential of any business. Early indications in Q3 from bellweathers such as CISCO, Intel and others look positive amongst a somewhat mixed picture, whilst Asian and Emerging market businesses appear to have sailed through this "developed world recession" with barely a ripple.

Likelihood of an earnings letdown in 2010 ? First half: 7 out of 10. Second half: 3 out of 10.

More on these developing ideas next week....

Steve

e-mail: steve.davies@javelinwealth.com
contact: +65 65577185
website: http://www.javelinwealth.com
Javelin Wealth Management supports www.kiva.org, the global microfinance philanthropy initiative.

Rolling over...

This attached piece, written by a Morgan Stanley strategist, is the best comment on the issue of maturing debt that I have read thus far: definitely worth a read...

Insight - Reclogging the US credit system - FT.com 11th November 2009
by Caitlin Long - Head of Corporate Strategy, Capital Markets at Morgan Stanley

The US financial system faces a daunting challenge in the next five years: $4,200bn of debt that is largely of speculative quality comes due in the commercial real estate and non-investment grade debt markets. At best, this wall of maturing US debt will strain credit capacity. At worst, it will prolong the credit crunch and restrain economic growth.

The next two years are crucial, since delay by banks and other lenders in recognising losses on commercial real estate loans could lead to a pile-up of debt maturities in the credit system in 2012 as this is when loans to highly leveraged corporate borrowers begin to mature en masse.

Such a 2012 reclogging of the credit system, if it happens, could force businesses to liquidate bad investments or pressure the Fed to re-open the monetary and credit spigots, potentially complicating the Fed’s exit from its existing stimulus programs.

The biggest risk to refinancing capacity for this wall of maturing debt, though, is the Fed raising interest rates to control inflationary pressures and dollar depreciation, if necessary. Higher interest rates would preclude marginal borrowers from qualifying for refinancing, regardless of whether credit capacity exists.

Around $2,700bn of commercial mortgages comes due in the next five years, peaking in 2011, and $1,500bn of leveraged finance debt comes due, peaking in 2014. The pattern of contractual debt maturities is front-end loaded for commercial real estate and back-end loaded for leveraged finance debt.

As the credit bubble inflated prior to 2007, commercial mortgage lending nearly doubled and leveraged lending nearly quadrupled in the preceding five years. Securitisation markets played a key role in this rapid growth, but as of now that channel is all but closed for new credit capacity. Collateralised loan obligations (CLOs) and commercial mortgage-backed securities provided roughly 60 per cent and 20 per cent, respectively, of peak financing capacity in the leveraged finance and commercial real estate markets.

In contrast to prior credit cycles, speculative-grade debt maturities in this cycle are staggered. This is a double-edged sword: lenders have more time to work through exposures, but the system will take longer to clear losses. During the frenzy, banks originated leveraged loans with terms of 5 or 7 years rather than 364 days, for example, because securitisation buyers were willing to purchase longer-term loans than banks would have originated for their own portfolios.

Here’s the good news: owing to buoyant markets, this year borrowers have worked down more than $91bn of leveraged finance debt that was previously scheduled to mature by 2014, and real estate investment trusts have raised more than $18bn of new equity capital. Yet these amounts merely chip away at the estimated $3,400-3,800bn of cumulative refinancing capacity needed over the next five years (after deducting estimated losses).

As long as the capital markets remain buoyant, borrowers across the spectrum will keep recapitalising, selling assets, restructuring, pre-paying debt, purchasing their debt below par, and replacing loans with longer maturity bonds. The Fed has engineered a window to allow many borrowers the opportunity to refinance, and the decisions borrowers make now about whether to access liquidity could turn out to be fateful if credit again becomes scarce when these debt maturities peak en masse.

The challenge is daunting and the range of outcomes is wide. To illustrate, leveraged loan maturities in 2012-14 are so large that, if the CLO market remains closed but half were able to be refinanced in the high-yield bond markets, the issuance volume would almost double the 2006 peak in issuance of high-yield bonds. Separately, visibility into commercial property valuations is generally low, but we estimate the equity shortfall needed to refinance commercial real estate debt maturing by 2014 is between $200-750bn.

Yet there are reasons for hope. Commercial real estate lending by banks, insurers and government-sponsored enterprises remained fairly constant during the credit bubble at roughly $300bn per year. If these lenders can maintain capacity at this historical level, the market could clear. To do this, though, these lenders must replenish lending capacity by clearing their underwater loans.

The longer credit capacity remains tied up in underwater loans, the less financing is available to healthy businesses that fuel economic growth. The tighter the credit capacity, the more industries will bifurcate into the “haves” and “have nots” based on access to capital. The longer the credit crunch lasts, the more pressure the Fed will be under to support the credit system. And the more the Fed decides to do so by printing money or moving interest rates even lower, the greater the pressure on the dollar’s value.

Why is this important?

Partly the sheer size of the numbers involved: $4.2trillion is a lot of money, and as a result of this, investors will need to be found to help re-finance it. It's also partly because most banks have not yet approached the issue as to how much the assets underpinning this stuff is really worth: the likelihood is, on current market values, much less.

A recovering global economy will help to ease the pain of any write-offs, but the likelihood is that the Fed and other central banks may have to keep interest rates low for a longer period than they want so that the refinancing can take place without pushing the borrowers to the wall, thereby causing another sub-prime style credit market implosion. In this instance, the vested interest may be to keep interest rates lower for longer, thereby allowing inflation to build, and the real value of this wall of maturing debt to be eroded, provided the value of the assets rises in line with the inflationary bubble.

This one's going to run on for a while...

Steve

e-mail: steve.davies@javelinwealth.com
contact: +65 65577185
website: http://www.javelinwealth.com
Javelin Wealth Management supports www.kiva.org, the global microfinance philanthropy initiative.

Q4 2009 and 2010 viewpoint

We've been doing a bit of early year-end navel gazing and have refined our views on markets and our portfolios for the coming six months, and herewith the front page of our latest strategy piece (if you want a copy of the longer report, please drop me a line at steve.davies@javelinwealth.com):

• 2008: The credit crunch morphed into a global economic crisis. Equities fell by an average of 45%, with Asian and emerging markets declining even further.
  

• 2009: Since bottoming on or around March 9^th, global equity markets have risen by an average of 64%, producing total gains for the year to date of 23%. Emerging markets have led the charge (+92% since March, +65% YTD), compared to gains of 53% in the S&P 500 since March (+14.7% YTD).

• The sharp rally in risk assets, whether equity, high yield, bonds, commodities, house prices etc. has been matched by a countervailing decline in the USD. All this has been driven by the explosion in liquidity as central banks have worked to offset the contraction in privately provided credit with financing from government and the tax payer.

• The size of potential bank write-offs looks less than feared as banks P&L’s have benefited from zero cost funding and lenient treatment on asset write-offs. Still a shell game.

• We had expected to see a hefty bear market rally, but what we've seen so far since March 9th of this year has been larger than anyone expected. The key to sustaining all this euphoria is revenue growth ,as opposed to margin recovery thus far which has been driven by cost-cutting. Last night's better than expected figures from CISCO are a good start.

• We are still positive on Asia and emerging markets, and remain overweight equities here as compared with developed economy equities, but recognise that global sentiment is still being driven by the US. The close correlation in asset classes of 2008 (when everything fell sharply) is being matched in 2009 (when everything has recovered strongly). It is necessary to have a position in equities, and we have rebuilt our holdings from a low base back in April. In comparison with historic norms, however, and with the jury still out on the momentum behind the recovery, we prefer to remain fairly modestly positioned.

• Corporate bonds (investment grade and high yield) have rallied sharply, generating extraoridinary returns for this supposedly more conservative asset class. Most fixed income products have now recouped substantially all of their 2008 losses, as it has become apparent that the levels of default which had been priced in, post-Lehmans, were unrealistically high. However, with a rise in interest rates unlikely in the imminent future, (the Fed's recent confirmation of a near zero interest rate policy is a key illustration of this), there remains potential for further gains.

• The US dollar has suffered from its inverse exposure to higher global risk appetite. We expect the recent rate of depreciation to level off, since other major currencies do not look particularly attractive. However, we continue to recommend a diversified currency spread.

• Recovering economic activity has helped boost commodities markets. Emerging market demand still provides a strong long term story. Gold continues to hold up well in the current uncertain environment, representing a continued hedge against the weakening of the US dollar.

• All in all, investment conditions are better now than they were at the start of the year (obviously). But there are still many clouds on the horizon which mitigate against taking for a fully gung-ho approach. We have advocated a diversified portfolio for much of this year. We continue to do so.

Also, please note that we have just published our very own "Javelin Investment Guide to Asking Better Questions". This is intended to help any investor get up to speed on the basics of building a portfolio and what issues they need to be aware of when they either use an intermediary or do it for themselves. We think it's a decent first effort: if you'd like a copy, drop me a line at steve.davies@javelinwealth.com.

Steve
e-mail: steve.davies@javelinwealth.com
contact: +65 65577185
website: http://www.javelinwealth.com
Javelin Wealth Management supports www.kiva.org, the global microfinance philanthropy initiative.

This is a good piece from John Authers in the FT today....

The Short View

By John Authers

Four times a year, Alcoa, the aluminium producer, is the most important company on the planet. The first big US company to report earnings each quarter, it did its bit to boost the market yesterday, making a profit when brokers had been braced for a loss.

That fed through into gains for the main indices. And the way Alcoa did it frames the chief issues for the rest of this earnings season.

The first and second quarter earnings seasons of this year were great catalysts for equities, as companies beat very bearish expectations. They had been able to cut costs.

But cost cuts cannot go on for ever, and have their own negative effects on the rest of the economy. So investors now need to see that companies can improve their revenues. Alcoa did this, by the skin of its teeth, with a rise of 9 per cent from the second quarter. Its sales are still down by a third compared with a year ago. The more companies offer positive surprises compared with bearish revenue forecasts, the more this earnings season could see another rally.

Thomson Reuters says brokers are braced for a 25 per cent year-on-year fall in third-quarter earnings - a bar that should not be hard to clear.

Fewer companies have made negative pre-announcements than usual, which might also suggest strength ahead.

But there are reasons for caution in the long term, as brokers expect a big rebound of 35 per cent in earnings in next year's first quarter. It is hard to see how this can be done without improving profit margins. During even an anaemic recovery, margins should recover as sales pick up again and freshly cut costs remain low. But margins are already ahead of their historic norms. The chances are high for a good season for stocks - but risks of disappointment in the new year look even greater.

Steve
e-mail: steve.davies@javelinwealth.com
contact: +65 65577185
website: http://www.javelinwealth.com
Javelin Wealth Management supports www.kiva.org, the global microfinance philanthropy initiative.

Taking stock...

Back in March, April & May, we looked at the positives and negatives that the market was confronting at the time.

Given everything that has happened since then (oh, and global markets have risen by 67% in the meantime) , it's been interesting to go through the same exercise again to see which points have proved correct or otherwise.

In general, we can see that the positives still seem to be intact, whilst a number of the negative concerns have, for the time being at least, been proved overdone:

Positives Then	…and now?
+ Stimulus Packages	Still there, although thoughts now turning to when these ease off?
+ Bank Rescues / Car Company Rescues	Generally effective
+ Credit Spreads Narrower	Still narrow
+ Global Quantitative Easing	Still there, although thoughts now turning to when to exit?
+ Investors Cash Heavy / Redemption Sales Appear To Have Ended	Inflows, but still lots of cash at globally low deposit rates
+ Commodity Prices Down	Stabilised at 50% of last year’s peaks
+ Inflation Down	Not an issue till 2012 (note return of deflation in Japan)
+ Interest Rates Down	Still low
+ Bottom Up Research Analysts Forecast Earnings Recovery in 2010	Probably too conservative in Q1 & Q2
+ Global Risk Appetite Has Risen	Still supportive
Negatives Then	…and now?
- Unemployment Still Rising	Still is
- IMF Forecasts Banks Need a Lot More Capital	Much capital raised, but no-one transparency about the remaining toxic assets
- Corporate Debt defaults?	Nothing major as yet
- Who's Going To Pay?	The grandchildren
- Top Down Economists Still Very Negative	Now less so other than perma-bears
- Commercial Property Values Falling	Seems to be stabilising
- Worries About Inflation Reappearing	Inflation forecasts now being pushed out to 2012
- Bond Yields Must Rise	Still a major issue and goes together with how’s it going to be paid for…?
- Earnings Forecasts Too Optimistic?	Still likely the case for Q3 & Q4, but the key is revenue growth in 2010
- Confidence Still Very Fragile. Those With Jobs Worry About Hanging On to Them	Still is with consumer spending still uncertain and savings rates up

So, the big issue for us now, is to decide whether or not markets have adequately discounted the positives, or if some of the negatives have been ignored to our future cost.

On the positive side, in comparison with the dire outlook we seemed to have reached by the first week of March this year, it is clear that government actions have done a tremendous job in helping to restore confidence in markets and financial assets. There has been some trickle through into the real economy in that banks are no longer hoarding cash quite so much, assetprices have recovered a bit, and forced selling has eased off. An added bonus of all the government intervention has been that interest rates have been deliberately suppressed, down to unprecedented levels. Statements from the Fed and other central banks imply that this will continue for a while.

What is less clear, however is whether or not the global economy has recovered enough poise to be able to stand on its feet without this government support.

Indications are not yet.

In addition, at the corporate level, earnings recoveries so far in the first half of 2009 have been as much due to de-stocking and cost savings as anything else. Top-line revenue growth is still patchy, and it is this which will determine if equity markets can remain stable or even rise further going into 2010.

At present, we're inclined to be optimistic: the growing level of M&A activity suggests that stronger companies with healthy balance sheets are taking advantage of ongoing disarray to buy out weaker or complimentary businesses and thereby adding to market share or increasing the size of their footprint. This means better margins for them and bigger profits. This trend seems likely to continue, even if the buyers are not using banks for the financing as much as they used to.

This also tends to support our other argument that, going into 2010, investors will need to show a greater degree of imagination than they have needed in the last 6 months when most risky assets were recovering sharply and seemingly indiscriminately.

The story for 2010 seems more likely to focus on "value investing" strategies which seek to pick up early on the winners in the shake-out. So far, few fund managers have proved themselves to be particularly adept in following this nimble-footed approach. Those that can, will do well: we'll be looking for them.

Steve
e-mail: steve.davies@javelinwealth.com
contact: +65 65577185
website: http://www.javelinwealth.com
Javelin Wealth Management supports www.kiva.org, the global microfinance philanthropy initiative.

So much for the correction...

Cash continues to flow into equities, as prevailing low interest rates and recovering data continue to encourage increased risk appetites. The world index is up almost 5% for September thus far, whilst double digit gains have been recorded in markets such as Russia and China (the latter recovering by 12% so far this month, after having slipped into technical bear market territory only in August when it dropped by 22%).

Whilst skepticism continues to be appropriate, given the speed of market recoveries since March, there is no getting away from the fact that there are large piles of cash looking for a home, and these is being relatively indiscriminate where they go, when faced with such low deposit rates.

It seems that there are only two major things that could interrupt or reverse this inflow: either a marked increase in interest rates, or a markedly slower rate of recovery which causes hoped for corporate revenue growth to evaporate.

For the first - higher interest rates - there seems little prospect of an increase any time soon, unless such an increase is triggered by a Fed led desire to prevent a run on the USD.

The usual excuse for raising interest rates - a need to choke off inflation - seems unlikely to feature for most of next year and possibly not till 2012. There remains a substantial output gap which will need to narrow before we will see companies being able to recover significant pricing power. In addition, high structural unemployment in the developed economies will keep a lid on wage growth in these areas for some years to come (unless, of course you work for the Victorian era UK Post Office, whose workers are likely to vote for pay related strike action next month).

So, at least as far as inflation is concerned, cheap money seems likely to prevail for a while yet. For as long as it does, global investment markets seem likely to be well supported.

The desire to prevent a run on the USD is a more difficult issue. Despite the periodic "strong dollar" rhetoric from US policy makers, in the short-term, it would seem that a weaker USD probably runs in the US's favour. Exporters are given a competitiveness shot. Imports are made more expensive, which also helps domestic manufacturers and squeezes foreign companies trying to access the US market. The government borrows in USD's, so it has little foreign currency debt to worry about funding with the proceeds of a weaker domestic currency.

The big issue is the degree to which foreign investors who are buying US debt will be prepared to continue buying the stuff at low interest rates if there is a growing perception that they will lose out on the currency. Rates may need to rise to compensate for the risk and to make those ongoing investments more attractive.

So far, however, foreigners appear to have been content to continue supporting US Treasury auctions of ever larger amounts of debt. Even more surpising has been the fact that Treasury yields have been little changed since the end of May.

However, we should continue to monitor these auctions closely (both in the US and the UK) since should investors start getting more demanding of higher rates, we could see all markets correcting quite hard as new debt gets priced at higher levels and yields on outstanding debt rises.

Rising bond yields will feed through to higher rates elsewhere, thereby bringing into relief the robustness of the economic recovery, and the sensitivity that still over borrowed consumers and governments will have to any increases in the cost of debt. Declines in the cost of such debt have helped to put a floor under asset prices worldwide, and have prompted huge margin increases for the banking sector. They have even contributed to the growth of another incipient asset bubble here in Asia as banks, flush with cash, start tempting consumers again with financing deals on property, shares, and other stuff. The first unsolicited "Dear Homeowner" flyers for such deals started arriving in my mailbox this month, a year to the day that Lehmans collapsed. The sense of irony is strong.

Currently, the global focus appears to be more on economic recovery and much less on long term financing implications. Governments have a major interest in ensuring this focus persists, so such equity market friendly sentiment could continue for a while yet - possibly into Q1 2010.

Once the immediate momentum of recovery slows, the attention will turn back to the debt and how it is going to be funded. In the meantime, we just sit back and enjoy the ride.

Steve
e-mail: steve.davies@javelinwealth.com
contact: +65 65577185
website: http://www.javelinwealth.com
Javelin Wealth Management supports www.kiva.org, the global microfinance philanthropy initiative.