| China and the Hedge Fund Dragon
This week we look at the possible latest entry into the hedge fund world, The People's Republic of China; review the cockroach principle of subprime mortgages; and investigate the possibility of whether we need more derivatives and not less than the $283 trillion or so we now have. It's a lot to cover, but it should all be interesting. But before we get into the meat of the letter, I want to announce a brand new web site. For the last six months, we have been in the process of creating a Chinese language web site of Frontline Thoughts. I have wanted to do this for years, and we are finally ready to go public. If you would like to read this weekly letter in Chinese, you can go to www.frontlinethoughts.cn. You will be prompted to click on English or Chinese and then enter your email address.
Australian, NZ Dollars Gain on Speculation US to Cut Rates
March 27 (Bloomberg) -- The Australian dollar rose to its highest in a decade and New Zealand's its strongest in 18 months, on speculation the U.S. Federal Reserve will cut interest rates this year, bolstering the appeal of higher-yielding currencies. The U.S. dollar fell against the euro after the Commerce Department yesterday reported new home sales unexpectedly dropped to their lowest in almost seven years. Traders increased bets the U.S. will cut borrowing costs in the third quarter, spurring investment in the currencies of Australia and New Zealand, where cash rates are 1 and 2.25 percentage points higher than the U.S. benchmark. ``The market separated the Australian and New Zealand dollars from the rest as the U.S. dollar fell,'' said David Forrester, head of global foreign-exchange research at Barclays Capital in Singapore.
Spending boom helps JSE outperform global markets
Johannesburg - The JSE is one of the few stock markets globally to have achieved new highs after the losses incurred between February 26 and March 5. The JSE all share index (Alsi) has risen more than 10 percent since its trough of 24 919 on March 5, and is 2 percent higher than its February peak of 26 932. But Wall Street's Dow Jones industrial average is up only about 3 percent from its low on March 16 and is still 2 percent shy of its high of 12 786 on February 20. Paul Hansen, the director of retail investing at Stanlib, said the recovery in commodity prices last month was partly responsible for the JSE's strong performance. But he pointed out that in Australia, which also benefits from rising commodity prices, the benchmark all ordinaries index "is not quite back at its former level".
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