Thought for the day
"Clouds come floating into my life, no longer to carry rain
or usher storm, but to add color to my sunset sky."
-
Rabindranath Tagore (Indian, 1861-1941)
Word for the day
Crapehanger(n)
A person who sees the gloomy side of things; pessimist.
(Source:
Dictionary.com)
Teaser for the day
Most left leaning intellectuals were
found searching for "substance" in PM's Man ki Baat.
Isn't it paradoxical?
Because the King talking to his
subjects only about welfare schemes and money is very feudal and burgeon.
9K on Nifty - I'll pass; you take it, if you must
The global markets are once again on a high dose of steroid. As
feared, Bank of Japan has undertaken yet another "whatever it takes"
type of adventure. The immediate repercussions are (a) "risk on"
trade gets more legs; (b) short sellers get squeezed out; (c) Yen weakens to
coax main competitors Korea and China to follow the suit and make effort to
weaken their currency triggering a currency war; (d) USD strengthens and
therefore deflationary pressures on developed economies exacerbate and (e) ECB
adds to the stimulus making US tapering look irrelevant in global liquidity
context.
However, the midterm implications could be far worse than
2008-09 collapse.
Remember, this stimulus is not USD liquidity. This may
conversely lead to massive USD demand at a time when US fiscal and current
account deficits are shrinking and USD printing presses are taking some time
off after working 24X7 for five years. This means USD may strengthened faster
and in greater measures than anticipated earlier, making life painful for all
emerging markets who are deeply indebted by dollar denominate debts.
Commodity world is staring at a deep abyss as the global
consumption is showing no sign of turnaround. Chinese, South and East Asian,
European, Indian, Latin American and even Middle East factories are running
much below their rated capacities. This stimulus is not likely to change much
on these grounds. On the other hand it may actually pressurize commodity
producers to lower their local currency prices to match the gain in USD.
Watch for widespread losses and rising unemployment, stress and
unrest in major producers like Australia, Canada, South Africa, Russia, Brazil,
Chile etc.
A substantially cheaper Yen could also reignite geo-political
rivalry between old foes Korea, China and Japan.
As per a Reuters report, the data this week data from both sides
of the Atlantic will give clues in the coming week on just how bad the euro
zone economy is and just how sustainable is its U.S. counterpart.
European Central Bank meets to decide on monetary policy and a
new slate of economic forecasts and the United States will release its
influential monthly jobs data.
A negative reading may precipitate ECB stimulus and softening of
US rate hawks. The equity bulls will take full charge. The bond bears on the
other hand will have to spend cold nights with their accountants to assess the
massive losses inflicted upon them. In my view, their losses will be much more
than what they might have earned in 2009-2011 by betting on European bonds.
And guess who will be having the last laugh? Of course it will
be the mighty US Federal Reserve, who bought all the bonds that came its way in
past 3years. It might very well end up making much more money than what people
thought it would have sank in saving US financial markets.
Coming to business, I am not too excited about the market rally
in past couple of weeks. I would stick to the plan, looking beyond 2015.
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