Imperative for Dash of Political,Economic and Business Acumen

As if central Asia conflicts, global financial resurrection and sovereign risk debacle were not indicative enough, even the additional Gulf of Mexico environmental debacle underscores the current imperative for a dash of political, economic and business acumen. Further and except in narrow time horizons now, capital markets themselves have amply demonstrated that misplaced have been assumptions of relative stability that conjured up many of the investment and trading strategies of the last decade. We believe the ramifications of a changed investment climate are still working through, not least on the amplitude of near term earnings.

However, our assessment remains of a rolling restructuring focused on sovereign change, albeit differing from that of the of the1990s that linked to corporate change related to globalization and to do with emerging country, especially Asian, finance. Rolling restructuring does links to our favor for a quality of delivery overlay to investment holdings and near term probability for range bound markets. Development of rolling restructuring continues, recently positively linked in exchange rate markets to decline of the Euro to $1.20 along with deficit reduction programs from Northern Europe to the South. The foreign exchange developments are not yet complete. The next required step being not in pressing politically for Renminbi/dollar rate gains (as wage gains in China could also accomplish its desired increased domestic consumption albeit at the cost of operating margins) but instead being a decline in the Yen towards 100-120 with a cogent deficit program with concomitant requirements for the United States.

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