My Problems Are Bigger Than Yours
Abberations Revealed During Pullbacks

There are problems and then there are ... their problems. When global equities have a pullback, everyone suffers, but some suffer more than others. Of course, when looking at markets that got hammered more than yours, its kinda gratifying that you did not have it as bad as some. Rejoicing in the suffering of people worse off than you -- aahhh... the joys of the wretched! One of my favourite lines from Ally McBeal was when she was asked why her problems are more important that other people's. Without missing a beat, she said "Because they are mine". That sums up the whole thing we call perspective.

Back to the sufferers:

a) India markets have it so bad, they even lost more than 6% in just one day of trading this week. India was even riper for a correction than the rest as it had gone ballistic over most of 2005 and carried on this year. I have been rating India as way overbought in my blogs, thanks largely to over-enthusiastic Japanese funds I guess. Added to the fuel, India has a substantive number of "commodities related" companies, which got whacked real bad owing to the correction in commodities prices, particularly Hindalco Industries.

b) Leading indicator CalPers (please read blog on Calpers/Wilshire on 20 April) which went gung-ho into Indonesian equities last month, got royally trumped, as the Jakarta Stock index lost as much as 4.2% in just one day this week on fears of continued slide in the rupiah (thus forcing Bank of Indonesia to up rates to stem capital outflows). Thanks CalPers!

As for the rest, it was just a pullback, as argued before, the bulls are intact. The main danger is whether we see US equities as being overvalued - because that is the market that will be under a continued higher interest rate environment for the rest of the year (owing to pressure to weaken the dollar). If US equities is overvalued, the higher rates will hit home hard on US stocks and that could derail global equities. However, from what I can gather, US corporate profits is very decent in terms of growth, and more significantly, its the amount of cash held by US companies, its at an all time high. Given that there will be a weaker dollar, the latter part of 2006 may see more buying of US assets by foreign companies due to the currency factor. All said, US equity's inherent risk is low this year despite rumblings in oil and US rates.