Economic Outlook: Changing direction

Asian markets turned in a mixed day Friday in a year when a mixed day could be considered a victory, given a long bear market trend.

The Nikkei average was down slightly in Tokyo, losing 9.3 points, while the Hang Seng index in Hong Kong was up 10.52 points or 0.07 percent. In South Korea, the Kospi index dropped 0.5 percent, while Taiwan’s Taiex muscled in a 0.1 percent gain. In New Zealand, the NZX 50 advanced. In Australia, the S&P/ASX 200 rose 0.7 percent.

A rare word was unearthed in the investment circles, a word that coincides with the title of a new animated feature film — although the coincidence was only that.

The word is: Up.

Couched in the caution of investment-speak, Justin Gallagher, head of sales at RBS in Sydney, told The Wall Street Journal, We experienced irrationality on the way down and now we’re experiencing it on the way up.

At City Index, strategist Alex Douglas almost used the word, too. There’s definitely been a change in sentiment across the client base in recent days, he said. It kicked off with the U.S. stimulus plans and it’s helping anything that has been really beaten down. People are trying to get set for the next big move.

Big move?

In Europe, investors were less zealous. With markets still open, the DAX 30 in Frankfurt fell 0.85 percent. The FTSE 100 index in London dropped 0.21 percent. The CAC 40 in Paris was off 0.72 percent, while the broader DJStoxx 600 fell 0.74 percent.

On the week, however, the trans-Europe DJStoxx 600 was up 3.9 percent, prompting another rarefied utterance in investment linguistics.

As BMW shares rose 4.8 percent with an upgrade bestowed by Societe Generale — notice the word upgrade — an unnamed broker cautioned investors not to miss the fun, the Journal reported.

Don’t miss the rebound. We estimate this is the right time to favor automobiles as newsflow is already improving and we expect production to improve going forward, he said.

Promising figures have also come from U.S. markets, which have been downright almost boisterous for the week, making forward strides four of the past five days with the kickoff on Monday when the U.S. Treasury announced its surgical procedure to remove toxic assets from banks.

That move came on the heels of the Federal Reserve’s confidence-building measure to buy $300 billion in U.S. Treasuries and $750 billion in mortgage-backed securities, which dropped both bond yields and mortgage interest rates.

A trickle of upbeat news followed, including home sales improving in California, where the housing bubble first burst and a surge in refinancing activity, which could increase discretionary spending.

In this relatively luxurious moment, U.S. Treasury Secretary Timothy Geithner began his push for regulatory reform in earnest, outlining a bill to rein in hedge funds and financial firms that could cause systemic risk with a disorderly failure.

The pitch precedes a global summit in London of Group of 20 nations, where Geithner and U.S. President Barack Obama will try to coordinate their efforts with other world leaders.

With the impact of the fiscal crisis as pervasive as it has been, some hedge fund managers were prepared to face inevitable changes but others were ready to stand and fight for their independence. Geithner said, It’s a great tragic failure of the country that we came into this crisis without anything like the broad authority governments need to manage financial crises effectively and protect the economy from the trauma that comes.

In spite of the emotion, U.S. Rep. Don Manzullo, R-Ill., said, You’re talking about seizing private business — you don’t consider that radical?

What kind of battle will it be? Can you say up hill?