The Spirit of Christmas and the Markets

I was going to develop a post with pictures of Christmas in Singapore, but I wasn’t at home enough to take the pictures of Orchard Rd and get them up here. Anyway, suffice it to say that they go all out here for Christmas.

It’s odd. A non-Christian country. Christmas trees and lights so bright and sparkly-drippy-blinky that you’d think you were downtown NY at Macy’s, or on Beacon Hill at FAO Schwartz. Snow making machines at malls that make bubbles that look like snow. Every store has a decorated tree, with boxes wrapped and decorated to the nines underneath. What’s going on, how can all this spirit exist, you would ask, in a primarily non-Christian country?

To digress, There’s a dual-layer caste system here. The ultra-rich (doctors, professionals, managers, and expats on packages from their companies) living in private houses and condos, and the mostly-poor living in government-subsidized HDB flats, 3BR 600 sq ft apartments which are purchased with 10% down (now costing around 350,000 S$) with the Sing government supplying the rest of the capital as long as the borrower’s working. 3 generations living in one of these, the younger generation not getting married and having babies because they can’t afford a place of their own, so they’re living with parents and grandparents, until the family dies and they can inherit a place of their own. I’ve been told that this caste’s success is based on achieving the 5 C’s: Cash, Credit cards, Car, Condo, and Country Club membership.

All the Christmas “spirit” in evidence here doesn’t add up. My conclusion is that the merchants with their use of the glitz and glamour of the Christmas season decorations are convincing the lower-caste to purchase gifts and spend money during the Christmas season. I see advertisements everywhere for stuff where if you buy it, your [family girlfriend boyfriend child parent] will be happy, and how your life will be improved because of your purchases.

I see the merchants here not unlike the bankers creating and satisfying the markets for derivatives and other financial instruments. The bankers, the Madoffs, and even governments of nations are creating risk appetites or at least capitalizing on them and taking money from pension funds, private investors, and money market funds to satisfy the lust they’ve created for yields and growth.

I will never be a BAMAG. I won’t be able to create instruments to satisfy risk appetites. I will never be able to call tops or bottoms of these instruments. So I will try to ride the wave, and let the BAMAGs create the instruments and manage them, I’ll ride the trend until it changes direction, then I’ll short it as it returns.

Here are some trends I’m watching:
The Euro. Under pressure. Maybe even headed for a failure. Is it trending down now? And how to trade it?

European sovereign debt bonds. Under pressure. Maybe headed for default; delayed or cancelled payments. Not soon, maybe April.

China. Urban areas overdeveloped, rural areas with populations leaving in droves, but because of the property bubble, they have no place to live. Food prices up.
The VIX has nowhere to go but up. Short trend, maybe.

I’m worried about the US/Mexico border again. Maybe the drones can keep it under control, but maybe there’s a trading opportunity here.

Gold/Silver. They do the best when markets aren't advancing, when there's a threat of inflation, and when nations' monetary systems are in jeopardy. I don't see any of those happening in the short term, so maybe we'll see gold/silver pull back.