David Fuller and Eoin Treacy's Free (Abbreviated)
Comment of the Day

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September 29 2014

Commentary by David Fuller

Hong Kong Protests Are a Threat to Xi and His Chinese Dream

Here are two brief sections from the beginning and conclusion of this informative article by Dexter Roberts for Bloomberg Businessweek:

The swelling protests in Hong Kong that have gripped the world’s attention are Xi Jinping’s and the Chinese Communist Party’s worst nightmare. The fear is that if not properly contained, the street protests could flare into China’s own version of a color revolution (like the Orange Revolution in Ukraine) and prove an existential threat to the leadership.

“Street movements can evolve into revolution when more demonstrators become embroiled in them,” wrote the English edition of the People’s Daily-owned Global Times today. “However, Hong Kong is not a country; it neither has the conditions for a ‘color revolution,’ nor are the forces on the street influential enough to mobilize its entire populace.”

But even without such a dramatic and still probably very unlikely outcome, equally damaging is what the protests are doing right now to the standing of Xi and the rest of the top Chinese leadership.

Just as Xi wants to demonstrate to all that he’s the most forceful and effective leader in decades, that the party is fully in charge despite China’s myriad problems, including corruption, income inequality, and social unrest, and that he has an inclusive vision for all Chinese people, including those in Hong Kong and Taiwan, the protests are sending just the opposite message.

And:

Ultimately, if it were deemed absolutely necessary, Xi and the rest of the top leadership probably would not shrink from aggressively squashing the protest movement—the likely economic and business fallout would be unfortunate but a cost worth accepting to ensure China’s continued authority over Hong Kong. Xi is remembered for some ominous lines he delivered in an internal speech in late 2012, on the collapse of the former Soviet Union.

“Why did the Soviet Union disintegrate? Why did the Soviet Communist Party collapse? An important reason was that their ideals and convictions wavered,” Xi said. “Finally, all it took was one quiet word from Gorbachev to declare the dissolution of the Soviet Communist Party, and a great party was gone. In the end nobody was a real man, nobody came out to resist.”

David Fuller's view

I have little doubt that Xi Jinping will crack down on Hong Kong’s protests if they continue.  Mainland China faces a difficult economic transition and last thing the Communist government wants is a grassroots push for democracy. 

The last paragraph above, quoting Xi’s comments on the collapse of the Soviet Union is chilling, showing either no understanding of the resentment felt within countries absorbed by the USSR, or no concern other than “a great [Communist] party was gone.”

What about the Chinese markets?

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September 29 2014

Commentary by David Fuller

Email of the day 1

On diversification if an investor is not happy with an aggressive allocation to stock:

“Thank you for posting the Weekly View re Bonds and the interesting chart. This seems to bear out your own views on the risks of longer dated issues. However for those of us who are in need of some diversification in our portfolios from stock risks and their correlation, bonds seem to be the chosen route of the few investment books I have read. Perhaps holdings in direct property trusts is a better solution but their yields are also sensitive to interest rates. How would you tackle the issue of diversification for the medium term if an investor is not happy with and aggressive allocation to stocks? My continued thanks to you an Eoin for the excellent comment which you have maintained so consistently through the migration to the new service.”

David Fuller's view

Many thanks for your kind words.

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September 29 2014

Commentary by David Fuller

Email of the day 2

On Bill Gross

“It's interesting to note that over the past several months it seems that Mr. Gross was a large buyer of shares in a number of Pimco funds.”

David Fuller's view

That is interesting and perhaps controversial, although I cannot comment further, because I have no other information other than what I occasionally hear from a financial channel while in the home gym.

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September 29 2014

Commentary by David Fuller

California Drilling Frenzy Has Nothing to Do With Oil

David Fuller's view

Farmers have always had my respect, because we cannot live without them and they are among the world’s hardest workers.  They also live with constant risk, mainly from variable weather, plant or livestock diseases, and the vagaries of market prices. 

California’s drought is not unprecedented but that does not make it any less scary today.  

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September 29 2014

Commentary by David Fuller

How olive oil could reverse heart failure

Here is a section from this informative article published by The Telegraph:

Researchers looked at how the beating hearts of rats responded to oleate or palmitate, the fat found in animal fats and dairy.

When oleate was pumped through the failing heart muscle, it suddenly began to work more efficiently.

“We saw an immediate improvement in how the hearts contracted and pumped blood," added Dr Lewandowski.

However when animal fat was used the diseased hearts worsened and more toxic fat was produced.

Previous studies have suggested that sticking to a diet high in olive oil can be as effective as statins at reducing the risk of a heart attack.

Researchers in Barcelona found that volunteers assigned to a Mediterranean-type diet had a 30 per cent lower risk of having a heart attack or stroke over five years, compared with those randomly selected for the low fat diet.

A review of 50 academic studies in 2011 found that diets high in olive oil lowered the risk of developing conditions such as diabetes, obesity and high blood pressure.

The research was published in the journal Circulation.

David Fuller's view

I think most of us are aware of the health benefits from a Mediterranean diet.  The latest research continues to confirm its merits.  I certainly feel much healthier on a Mediterranean diet. 

A PDF of the article is also posted in the Subscribers' Area.

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September 29 2014

Commentary by David Fuller

The Markets Now

Held at London’s historic East India Club at 16 St. James Square SW1Y 4LH

 
 
 

David Fuller's view

If you are near  London, do come along to our next evening seminar, commencing at 6:30pm on Monday 6th October, in the Club’s Rugby Room.  Here is the new brochure containing all details.  Your spouses, friends and associates are also welcome to participate in these informal and interactive discussions of global markets, which are never compromised by marketing spiels.  Following the three presentations, I would be delighted if you have time to join us in the East India Club’s American Bar for a welcome drink and further conversation.  

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