Thought for
the day
“The Chinese seemed to be mourning Mao in a heartfelt
fashion. But I wondered how many of their tears were genuine. People had
practiced acting to such a degree that they confused it with their true
feelings.”
-Jung Chang (British, 1952 - )
Word of the
day
Repast (n)
Something taken as food; a meal.
(Source: Dictionary.com)
Shri Nārada Uvāca
Will Rajan preempt any pre-poll fiscal indulgence by hiking
50bps upfront?
2014 - War continues
If you can look into the seeds of time,
And say which grain will grow, and which will not,
Speak.
And say which grain will grow, and which will not,
Speak.
Shakespeare, Banquo -Scene III, Act I, Macbeth
The post Lehman period has seen an intense war between the
forces of “Greed” and “Fear” in the global financial and political fields. So
far most of the battles have been won by Fear. Potent fears of yet another
collapse, mostly kept investors under check. The torrents of liquidity emitted
by central banks in US, EU and Japan did occasionally come to aid of Greedy,
but were found generally inadequate. In 2013 however, for the first time since
2008, Greed appeared to be having a winning edge.
The forces of Fear, as we write this today, appear to have exhausted
most of their ammunition, e.g., EU disintegration, Grexit, PIGS default,
hyper-inflation resulting from the Mints printing money incessantly, Iran
reneging, Currency war erupting and endangering emerging economies, hard
landing of Chinese economy, etc.
Whereas the forces of Greed have got fresh batch of ammunition –
stable job market in US, housing boom in UK and US, stable financial markets in
EU, stronger USD, Chinese growth crawling up, moderate or no inflation, US
financials back in business, lower commodity prices, US energy revolution, and
mostly stable & peaceful conditions in hot beds like Pakistan, Afghanistan,
Iraq, Iran, Libya, Yemen, Sri Lanka (except smaller pockets like Syria).
The only immediate hope for the forces of Fear is a disorderly
withdrawal of monetary injection by US Federal Reserve. Failing this 2014 may
also belong to the Greedy ones.
It will not be before 2015 when further reinforcement for the
Fearful arrives – the inflationary impact of QE may begin to appear on the horizon,
US Fed begins to talk about tightening rates, EU and BoJ achieve their
inflation targets and talk about moderating liquidity, US completely withdraws
from Asia and a war for supremacy and control ensues between Asian forces,
Emerging economies are challenged by inflation, trade imbalances created by US
energy boom and stronger USD, etc.
Many battles of this ongoing global war have been fought in
India too. Indian politicians have mostly sided with the Fearful, providing
them with enough ammunition and food to survive. The Greedy ones have been
supported by the global forces (FIIs), who have provided enough supplies to
keep the hope afloat. Most Indian investors have watched this intense battle
from the sidelines so far. The miniscule participation, if at all, had been
from the side of Fearful.
However, since September 2013, when a new General (Narendra
Modi) took charge of the forces of Greed in India, the domestic Indian
participants have been rather ambivalent. Some of them have actively joined the
Global network of Greedy, but most are still undecided.
In next few days, we will make an SWOT analysis of the forces of
Greed and Fear as they are positioned in Indian markets, and suggest what would
be an appropriate strategy for the Indian investors.
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