Upbeat in Asia; Ping An, Santos and Honda rise(KOSPI 7.5%, Hang Seng 8.7%, NIKKEI 5.2%)

Market Watch ^ | 12/08/08 | Chris Oliver

[TigerLikesRooster]

Upbeat in Asia; Ping An, Santos and Honda rise

South Korea, Hong Kong shares ride sudden wave of investor optimism

By Chris Oliver, MarketWatch

Last update: 2:17 a.m. EST Dec. 8, 2008

HONG KONG (MarketWatch) -- Asian stocks jumped Monday, with investors heartened by signs that governments will roll out more stimulus measures to ward off an economic collapse.

Drugmakers were among standouts in Tokyo while energy group Santos Ltd. led gains in the commodity sector in Sydney on reports it may be the target of a takeover attempt.

President-elect Barack Obama "has been making some strong statements about the economic-stimulus package," said Yoji Takeda, a fund manager with RBC Investment Management Asia. He added that investors in Tokyo were also cheered by lower trading volumes in Tokyo, a possible sign that forced selling by hedge funds and other institutional investors may have run its course.

In a nationwide radio address Saturday, President-elect Barack Obama unveiled the biggest government-funded work program seen since the building of the interstate highway system in the 1950s.

[TigerLikesRooster]

Symbol	Name	Last Trade	Change	Related Info
^AORD	All Ordinaries	3,553.80 12:11AM ET	126.60 (3.69%)	Components, Chart, More
^SSEC	Shanghai Composite	2,090.77 2:00AM ET	72.12 (3.57%)	Chart, More
^HSI	Hang Seng	15,044.87 4:56AM ET	1,198.78 (8.66%)	Components, Chart, More
^BSESN	BSE 30	9,161.03 5:00AM ET	195.83 (2.18%)	Chart, More
^JKSE	Jakarta Composite	1,202.34 Dec 5	2.98 (0.25%)	Components, Chart, More
^KLSE	KLSE Composite	N/A	0.00 (0.00%)	Components, Chart, More
^N225	Nikkei 225	8,329.05 2:00AM ET	411.54 (5.20%)	Chart, More
^NZ50	NZSE 50	2,699.81 Dec 7	6.91 (0.26%)	Components, Chart, More
^STI	Straits Times	1,659.17 Dec 5	0.00 (0.00%)	Components, Chart, More
^KS11	Seoul Composite	1,105.05 4:02AM ET	76.92 (7.48%)	Components, Chart, More
^TWII	Taiwan Weighted	4,418.33 12:46AM ET	193.26 (4.57%)	Chart, More

[TigerLikesRooster]

Obama’s $1tr infra-bubble-talk works at least for a day, I guess.

[Son House]

I’m planning the con last for the year, so I can sell into a up-tic 3rd quarter, then let the newly conned investors hold the next portfolio of bail-out companies,

had I known McCain would be the Republican nominee, I would have been out dow > 14,000, but at least I got a $1500 used car and a Epiphone 1963 j-45 acoustic guitar reissue figuring at the time I would at least get some enjoyment out of the market high,

life is great when you learn to enjoy the here and now, even while watching Democrats(who polled as best for the economy) ruin the economy

[Always Right]

I think several of those indexes will go up 100% from their lows by end of next year.

[Travis McGee]

A sugar high that will last about as long and lead to a similar long term consequence.

[Travis McGee]

"Business will turn for the better this month or next, recovering vigorously in the third quarter and end the year substantially above normal."

~~Harvard Economic Society, May 17, 1930

[TigerLikesRooster]

Next time we need a bucket-full of sugar to give the market the same kick for the same duration. Let's say the modest sum of total GDP of U.S. in 2008 ?

[nicola_tesla]

On what basis - more debt ?

[blam]

BFL

[Always Right]

On what basis - more debt ?

Because the fed is doing what is right to turn the economy around. As long as the fed keeps money flowing and the banks lend, our economy will be OK and this downturn in the markets will have been a gross overreaction. The only problem is, I haven't seen the banks starting to lend like they need to.

[nicola_tesla]

Lend - to whom ? How many people and businesses are credit-worthy today ?

How about those in foreclosure situations on underwater houses - lend them more money ?

Or businesses whose customers are up to their eyeballs in CC debt ? Is their customer base going to find new money for spending soon ?

You make the same mistake as the thieves in DC. You think debt is the proper way to build an economy, when in reality, at some point you must start to service that debt and that debt service is mathematically inherently deflationary.

The real problem is that there is way too much debt already in the system. There is no way to take on more and service it. When houses in many markets are 6-12x annual income and can only be “afforded” with liar loans, what has to happen, hmmm ? When new cars can only be afforded by rolling over the remains of the old loan into the next one and extending the loan from 60 to 72 months, is that an affordable loan ? The bad debt must be defaulted and washed, people and businesses will take losses, and then the system can go forward.

People are maxed out on credit, and you can’t change that by offering new loans.

[Always Right]

Lend - to whom ? How many people and businesses are credit-worthy today ?

There are a lot of credit-worthy individuals out there who can get loans. We went from giving no doc loans with 125% loan to value ratio to people with a credit score of 580, to having fully doced loans with 80% loan to value ratio to people with 680 or better scores. That is an extreme shift and is causing more foreclosures, more bank loses, driving home prices down, and is the leading cause of this recession. The lending practices in the boom years were insane, but you can't shift lending policies that extremely without causing great pains. I would lower credit scores to about 640 and have more 95% loan programs for those with good credit.

People are maxed out on credit, and you can’t change that by offering new loans.

If you grow the economy, get home values raising again, get stock values up where they should be, and get America working again, you can change all that. We needed to slow down, but we don't need a crash.

[nicola_tesla]

Grow the economy - other than layoffs, what’s growing ? We have so much of a debt overhang and we’ve bought so much stuff these last 4 years that it’s not really a hardship to not go to the mall every week.

How can you raise home values ? The major reason we’re crashing is that homes are grossly overvalued. The sustainable debt rate/income for housing is 2.5-3x annual income. For a $43k median income, that’s a 120k house. Most areas of the country have a lot further to fall to get down to this sustainable level.

And what’s this about stock values where they “should” be... huh ? The P/E on the S%P has been between 19-25 for the last few years; the average is 10-12. Company earnings are cratering; stocks need earnings to go up. Where are the earnings going to come from ?

In short, you have made a lot of simplistic statements with no basis in the fundamentals. Fact of the matter is, until wages go up, valuations will continue to go down on many asset classes. Wages can only go up in response to productivity increases and none of that is on the horizon in the next year or two. Layoffs will continue, which will put additional downward pressure on wages, which will further depress valuations.

Excess must be shaken out of the system, and there’s only one way to do it, unfortunately.