Tom Scollon

I have to be honest I am without internet so no charts. I am sorry. I should tell more - I laze on a Mediterranean island - a small break from the mainland - Southern Europe.

It's lovely. Exquisitely beautiful. But the realities are never far away and constantly I ask how long can this last. But I enjoy the day

I don't deny anyone the good times but somehow they must be paid for - from earnings - not debt. And in Southern Europe I see very few people - relatively - working. Yet they want the boat, the fast car, the holiday house overlooking the Riviera and to have their fill on rare cheeses and the best of Bordeaux and dress in the coolest of rags.

Having now worked in Asia for almost three years the contrast is overpowering. Asian debt is significantly lower. Savings is higher than Europe. Wages and cost structure a fraction of Europe and quality fast catching up and surpassing in some aspects.

I hear you say Europe has class, creativity and clever design - but where will the next Apple, Google be born - unlikely Europe, possibly USA but a very good chance Asia.

But the key difference is that the "energy" in Asia is "can do, will do, compete at all costs..... and so on"

So what is the relevance of what I write?

I see markets climb day by day and I look for the underlying matching fundamentals but fail to find them.

Numerous markets are back to the 2008 highs - but yet little, if any, structural economic change has taken place over the last five years. The bandaids that were applied have fallen off. All that was old is now new again.

Empires implode from within. We have seen many European empires rise and fall - well at least read about them in the history pages: British, French, Dutch, Italian .... the list goes on. We live in the era of the slide of the USA.

I cannot see any paradigm changes in the USA or Europe that will arrest the slide. I travel on a European passport and love so much about Europe but I see the realities and vivid contrasts as I work in Asia.

The moves in equity markets over the last five years have been western driven - well really USA. Of course markets were undervalued at the five year low but now they are overvalued.

Let's just consider for a moment a point about using technical analysis.Technical analysis requires a series of data to measure - and the more the better. So the short term - or daily top - is not seen till well after the event generally. Sometimes easy to see in hindsight but at the time usually not. Unless you have a major top on light volume day for example.

Weekly tops obviously take much longer to recognize in hindsight and are generally more confirmation in nature. There has been much analysis of the 2007/08 high and most people can see it now, looking back.

So there are no flashing lights saying this is the top so some buyers continue to support the market.

Current markets may well climb higher but the more they do - the bigger the fall that is being set up!

I might be writing the same story in a month or two or three - but one day it will come true.


Enjoy the ride

Tom Scollon