*From the author at CLSA(HK), the keywords for market bottom can be read below. More information on TIPS (Treasury Inflation Protected Securities) can be seen here
http://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm And the chart: http://finance.google.com/finance?q=tipsx Watch corp. bonds. It should rally before the equity market (as the deflation comes in) Elaine** * ---------- Forwarded message ---------- From: Russell Napier, CLSA <russell.nap...@clsa.com> Date: Fri, Dec 12, 2008 at 11:13 PM Subject: RE: CLSA | Investing at the bottom Hi Elaine The research is entirely based on my book which studies the US market in four key periods 1921, 1932, 1949 and 1982. I believe that given this is a large market and the analysis was over such a long period that it would have applications elsewhere. The key part of this analysis is that to call equity markets higher- I would say this is anywhere- we have to believe that deflation is not as likely as markets (TIPS in particular) are pricing in. The key part of the research is that three things will tell you when equities have bottomed- *- co**rporate bonds- will rally before equities* *- commodities (in particular copper)- will rally with equities* *- TIPS- although this is a more recent financial instrument (launched 1997) will rally with equities.* None of these things has turned for the better yet and it is too dangerous to call a bottom in equities until they do. My forecast is that all these prices will start to improve soon but with corporate bonds leading you don't need to forecast you just need to wiat. In other markets I would certainly keep a keen eye on corporate bonds although I realise they are less liquid. We also need to see stability in the capital account which is important to stabilise interest rates as part of the package. In 1998 one of the best indicators that things would improve was an acceleration in FDI inflows. This is one of the few times when the outlook for capital flows was so clear. *Stabilising capital account and a rally in corporate bonds in Asia should be the two lead indicators for Asia. * Still waiting. I assume you are a client of CLSA. If so I can get the appropriate sales person to send through the full report. Russell ------------------------------ ** *Sent:* 12 December 2008 06:08 *To:* Russell Napier, CLSA *Subject:* CLSA | Investing at the bottom *Hello Russell, I'm interested in your research which calls for a market bottom, is this also apply to Asian/Emerging Markets like India, China and Indonesia too? Really apreciate your comment. Thanks. Elaine Sui* *CLSA CLEAN & GREEN: Please consider our environment before printing this email. *The content of this communication is subject to CLSA Legal and Regulatory Notices. These can be viewed at *https://www.clsa.com/disclaimer.html* or sent to you upon request.
