"This war is like
an actress who is getting old. It is less and less photogenic and more and more
dangerous."
—Robert Capa (American, 1913-1954)
Word
for the day
Compunction (n)
A feeling of uneasiness or anxiety of the conscience caused by regret
for doing wrong or causing pain; contrition; remorse.
Malice
towards none
How could Amar Singh, who
has never been public servant, minister, police or judge, could save someone
from going to jail?
Will SC take suo moto
cognizance of MSY's 'confession' and order an inquiry?
First random thought this morning
I am not sure whether many people noticed it, but to me it was rather
too conspicuous. The MSY and his clan treat the State of Uttar Pradesh as
grocery shop run by their family. In their discourse, they sound like 'owner'
of the State. And we all know MSY family is not the only one that sounds like
that. The first families in many other States also behave in the same manner.
This failure to obliterate the feudal mindset is perhaps the most
unfortunate aspect of our democracy.
Waiting for the tide to turn - 2
As I suggested yesterday (see here), I am inclined to believe that the bull market in global
financial assets that started in 2009 with adoption of "whatever it
takes" style of monetary policies by central bankers is tiring and the
tide may turn soon.
Under the circumstances, the
winning investment strategy will naturally be the one that could anticipate the
blind turn well in advance and moderate its pace accordingly.
To those who still suffer from the
trauma of 2008-09 global financial crisis, I must say that the turn of the
cycle this time may not be as dramatic as it was in 2008, given the hands on
central bankers with "whatever it takes" mindsets. Nonetheless, the
correction in asset prices could be severe.
My search for some early signs of
turn in the global tide has made me dust off some old books - though to little avail.
The history could only guide that take your guards well in time and do not wait
till the last moment to jump off the ship. Hope could be your worst enemy in
this case.
Besides books, I have also sought
refuge under the aegis of St. Google. Got some useful advice and interesting
anecdotes. For example, a Bloomberg Business Week report recounts that the year
2017 ends with digit 7 and "that makes us due for another financial
crisis. The biggest one-day stock drop in Wall Street history happened in 1987.
The Asian crisis was in 1997. And the worst global meltdown since the Great
Depression got rolling in 2007 with the failure of mortgage lenders Northern
Rock in the U.K. and New Century Financial in the U.S."
So far I have been able to note
down five major trends that could potentially play a role in bringing up the
anticipated course correction in the global financial markets:
(a) The unprecedented global cooperation seen during the last
financial crisis has waned considerably. BRICs are no longer moving in tandem.
EU is struggling with Brexit. US is likely to have a leadership that may not
inspire many NATO and G-20 colleagues.
(b) China is no longer seeking higher growth. It seems to have
adjusted to ~6% growth trajectory. Chinese financial system has been like a
black box so far. Opening it may cause tremors across asset classes.
(c) The aggregate global debt level is much higher as compared to the
levels during the previous crisis; and to make the matter worse, a large part
of this debt is yielding almost nothing. A decade of sub-par economic growth
has constricted the fiscal maneuverability of the government across the globe.
(d) The unconventional monetary policies followed by the central
bankers have rendered the conventional method of currency valuation mostly
useless. The managed currency values and unmanageable bond prices are right
settings for a perfect storm.
(e) The commodity producers are now much weaker as compared to 2007.
Will share some more thoughts on
this next week.
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