Interesting Links

[ilonaross]

I wanted to put out a brief update to my commentary from last night.

The one positive I noted was that a few large liquid growth leaders were acting
"stubborn" and showing excellent relative strength. Indeed, these stocks bucked
the trend once again today, and led the major indices to close well off their
lows in somewhat of a positive reversal day. While the market continues to
sell-off, these stocks continue to base build and, at least for the time being,
are resisting the general market's distribution.

I noted that these stocks' behavior would offer a key clue as to the duration
and severity of this bear phase. I cannot underscore this point enough. Simply
stated, the seven stocks I noted, and a few others (listed below), will let us
know whether the bear phase ends soon, or whether the indices break recent lows.
As I noted, it would be foolish to prognosticate on the outcome and I will leave
that for others to banter about. For now, I note that it remains a positive
that these stocks continue to base-build, resist the selling pressure, and show
excellent strength.

In light of this, I am providing my first watch list in quite some time. This
is not a buy list, but merely a list of companies with superior fundamentals and
that are showing the ability to resist high levels of distribution in the
market. Should the market embark on a sustainable uptrend, many of these stocks
likely will be "go to" leaders. Of course, any continued selling in the general
market likely takes many of these stocks much lower. One should exercise
patience, for there will be ample opportunity to be aggressive on the long side
should the market decide to resolve itself to the upside.

AMZN, PCLN, ISRG, MA, AAPL, BIDU, CMG, GMCR, CROX, UA, LULU, HANS, MAKO, PSMT,
ARCO, CF, POT, NTES, ATHN, CERN, NUS, PANL, V, Z, LVS, WYNN, LNKD, AWAY, ALXN,
VRUS ,JAZZ, QCOR, PRGO, CPHD, SBUX, WFM, SBH, AZO, JCOM, CPA.

[Adriano]

Three days ago I was struck by this article:
China to back London as offshore yuan hub
http://www.marketwatch.com/story/chi...-ft-2011-09-07

Yesterday there was a comment on it:
Analysts skeptical about yuan convertibility
http://www.tradereform.org/2011/09/a...onvertibility/

A few months ago, Singapore was also involved:
Singapore Has a Leg Up In Trading-Hub Race
http://online.wsj.com/article/SB1000...728891436.html

Singapore can be offshore yuan centre, but won't surpass Hong Kong
http://www.reuters.com/article/2011/...7FB0GW20110411

What implications will there be, if China expands to Singapore as its second yuan trading hub after hongkong?
http://www.marketcrunch.net/question...after-hongkong

And so on, you can google and find other articles. I know nothing about forex, although it fascinates me. However, it seems to me that something is boiling. Not surprisingly, I would say.

[Adriano]

Does the Euro Have a Future? Soros explains his point of view:
http://www.nybooks.com/articles/arch...o-have-future/

[ilonaross]

http://www.bloomberg.com/news/2011-0...than-weil.html

[adam ali]

Ilona,

I sent you a private message (i.e., question), if you could check your Notifications tab on the site.

Thanks,

Adam

[buzzman]

By Fisher Investments Editorial Staff, 05/16/2011

Story Highlights:
• An accounting rule change proposal was made formally Friday that would move a step further away from the disastrous aspects of FAS 157.
• This should help resolve the debate over fair value accounting standards, but other aspects seen as contributing to 2008’s financial panic remain open for discussion.
• Regulators are busy trying to determine which banks pose “systemic risk” and which do not.
• Tellingly, some banks are lining up to say they’re small enough to fail.

Friday was a busy financial news day, with headlines dominated by better-than-expected eurozone GDP and slowing US CPI (i.e., inflation). But quietly, the Financial Accounting Standards Board (FASB) announced a proposal to adopt the International Accounting Standards Board’s (IASB) version of fair value requirements.

It might seem a bit out of character for accountants to make a noisy to-do about a rule change, but this strikes us as significant. The proposal represents a further step away from (and could essentially sound the death knell for) problematic aspects of FAS 157—the well-intended accounting principle that significantly contributed to 2008’s financial panic before losing much of its teeth following March 2009’s congressional hearings on the subject.

For some time now, discussion over merging US and international accounting standards to “harmonize” rules has occurred—a fine idea, but one also raising the possibility of FAS 157-like policy being reborn. After Friday, that’s still possible—but seems extremely unlikely. (We’re not superstitious, but we just knocked on wood.) If the rule is adopted as proposed, banks will still be required to report the fair value of assets held. But mark-to-market values for less-liquid assets intended to be held to maturity will be reported in footnotes (as they are, thankfully, today). This is vastly different than the period from November 2007 through March 2009—when banks were, disastrously, forced to give equal treatment to very dissimilar assets. This proposal, which the IASB and many banks support, should satisfy most seeking transparency, but is more measured—so bank balance sheet health won’t hinge on the immediate liquidation values of illiquid assets. While this decision should help resolve the fair value debate, other heavily discussed aspects of the panic still await resolution.

For one, regulators are busy trying to determine which banks pose “systemic risk” and which do not. In fact, many banks are arguing they’re small enough to fail—which some might see as odd (that is, if you assume corporations might want some sort of government backstop against their failure), but not if you consider 2008’s actual events.

Was the problem really all about some banks’ sizes, or was it more that investors couldn’t figure out the government’s next steps? Consider: Lehman Brothers and Bear Stearns were roughly the same size and type of institution—yet the government took entirely different paths in dealing with them (not to mention other troubled firms). The result? Widespread uncertainty leading to even greater credit- and equity-market volatility.

Some banks now seemingly think if they’re designated systemically insignificant, investors still have to ponder potential bankruptcy risk—but not handicap regulators’ schizophrenic actions. Being small enough to fail also removes those banks from potentially stricter government regulation, fees and oversight the “Too Big to Fail” (TBTF) banks could receive—which could expose TBTF firms to more subjective regulation ahead. Of course, the flip-side could also be true: TBTF banks could be a competition killer as customers flock to banks perceived to have an extra government security blanket. But these small- and mid-size banks wanting to avoid TBTF designation evidently see greater benefit in avoiding potential future government involvement.

Evenly applied, well thought-out regulation is a clear plus, but the government’s actions in 2008 don’t meet that definition. The financial panic was seriously exacerbated—if not initiated—by a series of regulator choices showing close to zero consistency or understanding of potential unintended consequences. No doubt, weak housing and credit market displacements played roles, but absent misapplied accounting rules and haphazard government responses, the crisis likely wouldn’t have been so steep and deep. Folks, 2008’s panic cannot be simply explained by claims it was the inevitable byproduct of banker greed run amok, “toxic” assets, wealth inequality or subprime and/or housing market woes. Those might be easy explanations to deliver and comprehend—and they largely exonerate regulators from blame—but they simply don’t fit the facts, nor do they provide investors with insight helpful in obtaining a sense of closure.

[Neil Stoloff]

Speaking of robots: http://www.computerworlduk.com/news/...ernment-paper/

"Algorithmic stock trading rapidly replacing humans, warns government paper

"Regulatory framework needs to be updated to keep pace with effects of technology"

UK report by The Foresight Panel, led by Dame Clara Furse, the former chief executive of the London Stock Exchange, found "'no direct evidence' that the computer trading in itself increased volatility,... but in specific circumstances it was possible for a series of events with 'undesired interactions and outcomes' to occur and cause massive damage."

[Billy]

A very clear, concise and practical description of Tuesday's bottom by Ivan Hoff

http://stocktwits50.com/2011/10/08/s...-50-october-8/
Billy

[Adriano]

Some interesting data about Indonesia, Malaysia, Philippines, Thailand, Vietnam:
http://asia-jobs.fins.com/Articles/S...ntiers-of-Asia

[Rembert]

The global debt clock
An interactive overview of government debt across the planet

http://www.economist.com/content/global_debt_clock