Leo Haviland provides clients with original, provocative, cutting-edge fundamental supply/demand and technical research on major financial marketplaces and trends. He also offers independent consulting and risk management advice.

Haviland’s expertise is macro. He focuses on the intertwining of equity, debt, currency, and commodity arenas, including the political players, regulatory approaches, social factors, and rhetoric that affect them. In a changing and dynamic global economy, Haviland’s mission remains constant – to give timely, value-added marketplace insights and foresights.

Leo Haviland has three decades of experience in the Wall Street trading environment. He has worked for Goldman Sachs, Sempra Energy Trading, and other institutions. In his research and sales career in stock, interest rate, foreign exchange, and commodity battlefields, he has dealt with numerous and diverse financial institutions and individuals. Haviland is a graduate of the University of Chicago (Phi Beta Kappa) and the Cornell Law School.


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Lows in the Chinese and Indian stock marketplaces in late October 2008 preceded the S+P 500’s major bottom on 3/6/09 at 667. Yet the final lows in China’s stocks, as in India’s, occurred in early March 2009 alongside the S+P 500.

The US stock marketplace (S+P 500 benchmark) continues to advance toward its crucial “final peak” during the worldwide economic crisis, 5/19/08 at 1440 (10/11/07 pinnacle 1576). To many players, the still fairly recent S+P 500 low on 10/4/11 at 1075 perhaps seems a relic of a distant dismal past.

But not only are China’s stocks (Shanghai Composite) far below (around sixty-three percent) their 10/16/07 plateau at 6124. India’s (Sensex) remains rather distant (about 17.6pc) from its 1/10/08 top just over 21200.  Despite the bull move in US equities, the Chinese and Indian stock playgrounds have continued within downtrends that began in November 2010/ April 2011 (or even earlier, in the case of China). Admittedly, China’s and India’s equity marketplaces may not reflect their so-called overall economies. But these sustained equity downtrends do fit the cuts by many gurus in growth forecasts for these two national economies.

Given the importance of China and India to the worldwide economic growth story, these Chinese and Indian bear stock trends should make one ask how strong the overall world economy really is.  US stocks and overseas ones need not travel in the same direction. Observers still should wonder which near term trend will prevail over time (going forward), the bull one in US stocks, or the bear one in China/India.

However, many commodity groups (at various times) in 2011 began bear trends. Despite differences between the various commodity sectors, this rough overall commodity pattern tends to fit the bear trend story expressed via Chinese and Indian stock patterns.  The broad Goldman Sachs Commodity Index peaked at 762 on both 4/11/11 and 5/2/11. Is the petroleum complex an exception to trends in base metals, steel, iron ore, steam coal, silver, agriculture in general, and even gold? Perhaps. There is obviously a risk of an Iranian event. Brent made a new high on 3/1/12 at 128.4, just above its April 2011 summits around 127.0. Yet NYMEX crude and US Gulf Coast gasoline and diesel fuel prices remain below their spring 2011 heights. Current overall petroleum industry inventories in advanced nations are at above average levels in days coverage terms, though a move to just-in-case inventory management probably has tightened oil stocks.

Maybe the money printing/low government interest rates/deficit spending by the US and many other nations will continue to rally some equity marketplaces (like America’s, especially given its very low Treasury yields) and bolster many commodities.  However, the bearish commodity trends that commenced in 2011, when interpreted alongside Chinese and Indian stock trends, nevertheless warn of slowing international growth and that a bear trend in US stocks may commence fairly soon. A popular refrain: “strong stocks (S+P 500) equals strong commodities, weak stocks equals weak commodities”. The stock aspect of this refrain probably should be widened to include members in addition to the S+P 500 and related “advanced” (OECD) nations.

In any event, despite the rally in the S+P 500, trends in the Chinese and Indian stock marketplaces warn that the worldwide economic crisis probably is not close to being solved.

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Worldwide Economic Growth Story- Chinese and Indian Stocks Alongside Commodities (4-2-12)

Chinese and Indian Stocks Alongside Commodities (4-2-12)

THE HOUSE OF BRICS- HOW SOLID? © Leo Haviland, December 13, 2011

What does travel through the diverse forests of Brazil, Russia, India, and China (the so- called “BRIC” nations) reveal?

Though the BRICs are key sources of world growth, they also reflect global growth patterns. BRIC territories do not possess sufficient independent firepower to propel the overall world economy significantly and permanently forward. In recent months, BRIC stocks have declined substantially. This BRIC equity weakness warns of current and further upcoming economic slowdowns not only in those countries, but sluggishness and even downturns elsewhere.

BRIC currency trends relative to the US dollar interrelate with this story told by equity playgrounds. Recent weakness in these BRIC foreign exchange cross rates reflect and confirm the fragility in BRIC stock benchmarks.

The key point is that Chinese currency appreciation, which had been slow yet persistent, now seems to be taking a breather. In the context of China’s substantial bear trend in equities, and given China’s status as a major exporter nation with massive foreign exchange reserves (a large bankroll to solve minor problems), what does this currency “non-appreciation”/modest depreciation against the US dollar suggest?

It indicates difficulties facing China finally have become quite significant- and more substantial than most China watchers recognize. In other words, China’s economic challenges (such as inflation, rising wages, weak property prices, substantial local government debt) may have grown to become a “fairly big problem”, even if Chinese authorities have not confessed to this. However, China did cut its reserve requirement ratio recently. So even if China’s stock marketplace is not an ideal benchmark for assessing “the overall Chinese economy”, at some point its stock price level and trend, when interpreted alongside other variables, can identify (coincide with) noteworthy Chinese economic problems.

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The House of BRICs – How Solid (12-13-11)


Many influential storytellers dream that economies of nations such as Brazil, Russia, India, and (particularly) China are very- or at least sufficiently- independent of America and other so-called advanced realms. Moreover, the BRIC territories supposedly possess enough power not merely to sustain adequate domestic growth, but also- at least collectively- to help drive the overall world economy significantly forward.

However, this endearing fantasy regarding the house of BRICs confronts substantial real practical barriers. Audiences should not have faith in a tempting doctrine of BRIC independence and almost endless and inevitable strength. The BRIC fraternity and numerous other developing regions indeed have built and continue to construct growing economies. Yet as the recent worldwide economic crisis that emerged in 2007 demonstrates, awful problems in a major developed nation such as the United States can spread rapidly and deeply around the world. As this is so, noteworthy troubles in the BRICs or elsewhere can affect advanced nations significantly.

Slowdowns in advanced nations probably will help to cut- and by more than a little bit- individual and collective BRIC growth relative to the sunny IMF predictions.
If the fiscal and banking crisis related to the European periphery can spread through Europe and around the world, so can the unearthing and spread of a significant problem in a nation as crucial as China. China is no house of cards, but its deck does not hold only aces.

Prior to the financial fires that began burning more visibly in 2007, how many players, regulators, or armchair quarterbacks declared that the US housing boom was likely to suffer an unhappy ending? Is China’s local government debt only a local problem?

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The House of BRICs (The Money Jungle, Part Six)