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|Posted on February 6, 2015 at 7:09 AM||comments (12)|
Two Thousand and Fifteen may become a very good year, for most nations.
In China, where they recently cut rates and introduced a Trillion Dollar stimulus, the dynamics of internal growth and development as well as for the export markets suggests robust growth. The Honourable Xi Jinping is quoted as saying that China will achieve a new standard in progress. His words are welcome, and should give heart to anyone who may be fearing a slowdown in China. The actual production and shipments overseas ( I hear huge ship loads arriving in Britain, and for the first time in many years hear the trains ferry the goods across in the middle of the night in a huge procession) testify to that.
In the U.S., the start of Prosperity which I had foreseen for November 2014 seems to have materialised, and heatmaps of happiness continue to grow for the people there, with increasing numbers of auto purchases, mortgages taken out on single family units, more people in work both seasonal and permanent, lower Oil prices (although that is a mixed blessing), and good weather, apart from the recent snow.
I see the DOW going upto 18,500* by June this year, although the prospects for 2016 may be mild, with perhaps the saving grace of Hillary Clinton becoming elected as the President. Sentator Jeb Bush is a strong candidate, but I detect the dynamics at play will ensure the Democrats will again have tenure of the highest position in the land.
*I am just expressing my opinion, based on the logics of what I perceive. People should speculate at their own risk.
The Oil producing nations will have to work in co-operation and ensure a stable oil price, otherwise their dollar-denominated revenues will not meet the cost of their imports, and may lead to ques outside empty supermarkets, waiting to buy stocks (g00ds) which are being rationed, as in Venezuela.
It makes me cringe in shock to see the situation in Ukraine, where the rebels loyal to the Soviet leadership are wrecking havoc and creating ghost towns, where life seems at 1950s levels. Mr Putin can be generous and call these people off. He must extricate himself from this very messy situation. It is doing no one any good. Once peace is restored in this region, hopefully the Rouble will recover, and help people in Russia share the common prosperity that is developing worldwide. Oil seems to be bouncing around levels which may be optimum, and which may prove good for everybody, including the newly formed shale and fracking operators. Mr Putin has to apply the generosity principle, and help the kindred folks in Ukraine. That conflict is just so unnecessary, it is just like bullying people who at one time Mr Putin was willing to big a brotherly hug. I just don't believe it.
Under Pradhanmantri Shree Modiji, India is on track for the fastest growth since Independence, although the recent industrial productions figures at 2.6 percent seem so faint. Provided the RBI decide to enjoin the procession of Recovery and lower the benchmark repo rate, things should improve. There is a great natural appetite for investment into India, with the right atmosphere. Creating a major air hub to compete with what exists in the Arab Emirates may be a good raising of the bar, but let us all wait and see what will actually materialise. But in the meantime, the commencement of building a 100 new cities seems a great vision, and Modiji has my congratulations. I hope his BJP policymakers and bureaucrats will ensure implementation and fulfilment of such measures.
The caution that I mentioned....while times are good, save a little for the future, and build some reserves for the second half of 2016, when it will all come in handy.
May the Lord's blessings be upon all.
Durudarshan H. Dadlani
|Posted on March 2, 2014 at 4:19 PM||comments (97)|
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|Posted on November 8, 2013 at 3:42 AM||comments (6)|
The announcement of the 0.25 percent cut in the European Central Bank's benchmark rate is an indication that the economic Recovery still needs a great stimulus, and this was EU's way of getting it.
Only the day before I read that Adecco, the temporary staff specialists, were seeing increased signs of hiring of staff, and European economies are showing a sign of strengthening Recovery. It seems the services sector is growing, which is a good sign. As more people are out and about and travel, they need to sit down and eat.
The U.S. "shutdown" which at one point affected between 700,000 and 800,000 workers, who were told not to turn up for work and others who were furloughed i.e. had their hours reduced to only attend at peak-demand times - that "shutdown" saw reduced demand in travelling and catering across the pond. Here in London I have noticed a few cafes and restaurants mostly used by tourists close. And that was the effect of just a lull in a few weeks of trading.
At the moment, although there is a positive buzz, the uncertainity of the debt ceiling raise pending for 7th February is bound to weigh down on sentiment. It seems Senator Paul has indicated that Dr Janet Yellen will see confirmation of her nomination to the Federal Reserve's chairmanship, and the administration of the spigot can continue.
Feelings on this question are mixed, as the Chinese sources suggest that the U.S. is seeking about $561 Billion over the next six months. This would equate to roughly $93.5 Billion a month. That definitely suggests a phase of monetary expansion bigger than before, as the quantitative easing was running at some $85 Billion a month, cut by 1/12th with the Sequestration. If the stimulus could be so increased,
then that would definitely improve the picture of Recovery for next year. But in terms of reality, perhaps the $85 Billion a month will need to be restored, as suggested by Treasury Secretary Jacob Lew. No one liked the Sequestration, with scholars being sent home due to non provision of a mid day meal, not to mention problems with funding necessary upgrades to fleets.
It is good news that housing in the U.S. registered positive gains in 44 States last month, and when a stable situation arrives after the debt ceiling issue is resolved, better gains may be expected.
In the meantime, a stable and happy scenario is expected up to Christmas and New Year worldwide.
Chinese PMI data suggests a growing strength in the domestic re-focus as well as exporting sectors.
The United Kingdom is registering positive growth in housing numbers and GDP growth, greatly helped by the introduction of the Help to Buy scheme. Hopefully speculators and buy-to-let landlords are not assisted so much that the property market may become a bubble, causing soaring rents, homelessness and reliance on the social welfare system.
A mixed picture of optimism, with the Twitter IPO yesterday providing some amusement. The market seems to manufacture some euphoria, with the underwriters making good profits.
That's it for now. Very soon I'm off to the World Money Show, at the Queen Elizabeth Conference Centre not far from Big Ben.
|Posted on September 24, 2013 at 5:10 AM||comments (1)|
The economic news seems pretty positive all round, for continued worldwide economic Recovery. India of course is out of sync on the benchmark interest rate, but it is a dynamic economy where the leadership are a little bit too cautious to accelerate growth. For the moment it seems it will just motor along steadily, and blaming the high inflation on the scarcity of onions, which they are plentifully exporting.
The Greek economy seems to be on the mend, with a secondary surplus expected. With a nation with a population of 20 million and a large area, perhaps they need to encourage people who enjoy farming. The potential must be huge with good climate, abundance of water and good weather as well.
The situation in Spain seems pretty positive too, with a growth of 0.2 percent expected for the second quarter. The benefits of creating jobs and filling up the empty housing, additionally with putting more buses on the roads to service secluded areas more frequently, will surely add to the growth. Blessed with good weather and friendly people, I believe there is huge potential for continued growth in Spain.
A Latin version of Hollywood and Bollywood must surely be a possibility, with intercontinental co-productions?
Germany, well the situation seems so good, with Mme Angela Merkel back in the driving seat.
As regards the U.S., the talk of taper seems both promising and cautionary. As Treasury Minister Jack Lew has suggested, the Debt Ceiling issue needs addressing quite soon. The talk to me seems like a tapered candle, or a washer to be tapered on a lathe...I suppose Mr Bernanke will suggested what will need to be done. The debt ceiling fix of a $1.45 Trillion in August 2011 was a job well done, adding to the money supply and creating the cash flow that has translated into so many jobs, a pick up in the housing market, and continued growth in the US economy, creating heatmaps of happiness for so many more people. The stockmarkets and the banks seem in robust health, creating a huge pool of capital that will service the needs of people as and when they need to borrow and spend. Cash rich companies like Apple attest to that fact.
What would be great would be perhaps the creation of 500,000 jobs per month on a costing of $7 billion per month. If that much additional capital was infused into the system by way of the taper, that would be just great. Five years after the collapse of October 2008, the economic systems seem in much better shape, with strong financial institutions and safeguards in place. A steady worldwide Economic Recovery seems to have been achieved, through co-operation and understanding of nations and the grace of God. In celebration and to continue with Recovery, the world counts on seeing the Republicans and the Democrats in Washington support a cordial agreement, and light a new candle to Prosperity.
Ladies and gentlemen, you may step up to the alter, and light the candle that will add substance to the drams of humanity.
(written by Duru-darshan)
|Posted on September 20, 2013 at 12:53 PM||comments (17)|
There are two types of inflation, shall we say, good inflation and bad inflation.
Good inflation is there when prices are going up due to continued increased demand.
Bad inflation is when the stocks are low, and are not being replenished, and the shortage
continues, and what is there is offered at a higher price, like onions in India.
In the 1930s, bad inflation took over the world, especially in Germany, with hyperinflation
and the printing of currency notes of high denominations and the usage of wheelbarrows to
carry the money to buy a loaf of bread. Such too was the situation in Zimbabwe not too long ago,
and there of course they did not even have wheelbarrows to carry the currency around. People
had to be trillionaires to buy a loaf of bread.
That shows an acute reaction to a model of currency issuance and control that leads to such a
grotesque situation. Where people can think and calculate and issue rationally, such a situation
ought not to arise.
In what was British India at that time, again in the 1930s, farmers stopped growing food because
it had to be sold at such high prices that people stopped buying as much as before. Farmers became
poor, unable to pay the rents on their plots or their housing. The zamindars could not collect their
rents, and consequently the whole system fell apart, the whole cycle of consumerism affected.
Such a situation causes bad inflation, where scarcity puts the prices up. Shortages are created,
together with the ills of hoarding, wastage while people go hungry and a disillusionment with production.
What was happening before the crash of 2008 and a hint of the 1930s in happening in India today.
Onions there are more expensive then the ones we buy in England, imported from the same region.
There is something quite wrong with the handling of the situation in India. I firmly believe the loosening of monetary policy and the reduction of the benchmark repo rate would have helped greatly.
That is the opinion of industrialists and that of bankers, but obviously not of the committee that decides such matters in the Reserve Bank of India. Today's hiking of the rate from 7.25 percent to 7.50
seems a step that will not help anybody.
With an increased money supply and lower interest rates, the Western economies have weathered the sceptre of a prolonged recession. By grace of God, with continuing production of crops and means to eat well, all other industries can do well also as consumerism gets a boost, a strengthening Recovery leading hopefully to a growing Prosperity.
Such should too be the case in India. Alas, if only they would listen and have faith. In such a burgeoning economy which has huge potential of further growth, they must have confidence of investment from abroad, even if they reduce the interest rate.
Today's interest rate hike indicates it was not welcomed by the financial markets. Clearly peoples' hopes have been dashed for the meantime. Hopefully, next month the situation may be more favourable.
|Posted on August 22, 2013 at 8:21 AM||comments (6)|
You know, there was a time when Twelve and a half Indian Rupees exchanged for a U.S. Dollar.
Today, the rate is 65 Rupees to the Dollar. Hardly a month ago, it was 55 Rupees.
For a country with U.S.$277 Billion in reserves, and a debt to GDP ratio of about 27 percent, this is
clearly selling the Indian Rupee too cheap.
What sort of policies have been in place that the currency has virtually fallen 400 percent against the greenback, in a period of less than two decades, when the growth in India has been quite healthy while the mature economies have structurally slowed down?
What is the purpose of encouraging foreign inflows of capital which periodically take flight and cause a panic in the markets?
Of course, with the Rupee at current levels, most overseas investors see this as a golden opportunity to invest in India. And the Finance Minister, Mr P. Chidambaram, has confirmed that inflows have been very healthy, and as it is absorbed into the system, a healthy picture will emerge. Growth for the 2nd half of this year is expected to be much improved, with exports increasing month on month.
Can't blame anyone for snapping up quality Indian goods at ridiculous prices, can you?
The Reserve Bank of India's repo rate of 7-1/2 percent is really responsible for the slight slowdown that Indian industry and consumerism have seen over the last year and a half. When the picture is so healthy, why should the RBI offer such a high rate to attract overseas investment? When compared to the mature economies, the differential is more than 5 percent and as much as Seven and a quarter percent. Is anyone listening? What is the logic of it? When India has enough for good growth, why does she need foreign inflows which periodically make the currency bleed?
The best announcement is that the RBI will not take any policy measures to try and curb the current and temporary fall of the Rupee to the absurd level.
On 5th September, the new Governor of the RBI will assume his office, and both Corporate India and the public wait with hope to see what path he follows to restore robust growth and much need relief for consumers in India. More people wish to buy houses and cars, take out loans for education and travel. India needs must add to the world economic growth story, and an orderly drop in the repo rate would prove the tonic.
|Posted on May 23, 2013 at 5:33 AM||comments (6)|
The I.M.F. has a good suggestion for Britain : to inject some capital into infrastructure projects. That would of course create or maintain lots of jobs, as well as upgrading the infrastructure.
There may be a good argument to bring forward the house-building at the racecourses, refurbishing houses in the deserted towns in the regions, and perhaps assisting people to move away from the main areas and into these new areas, which could create a lot of economic activity as well as giving people better housing, jobs (in a new town you would need doctors, nurses, cinema ushers, porters, teachers, traffic wardens, salespeople, double-glazing companies, solar panel engineers, builders, drivers, electricians).
The shale cracking or fracking industry could be a viable alternative, once safety concerns have been ascertained, creating jobs, lowering energy bills, making Britain an affordable place to live in, and attracting more people to consider making Britain their home if they are suitably qualified to add to the economic life here.
The lending requirements in the housing sector are of the order of a £100 billion, and yet Bank of England Guvnor Sir Merwyn King is only backed by 2 of the 9 MPC members for an additional stimulus of £25 billion. The other seven would probably like to keep Austerity measures, the snake that is squeezing life out of the European economies. As the IMF has suggested, growth would be the alternative, and a stimulus is the required cash flow mechanism that must be utilized. The U.S. quantitative easing policy has shown that it is a practical way to come out of recession, and both the U.S. and Britain are blessed in this regard in that they can issue their own legal tender. The MPC board members can hopefully see the sense of it, and give Sir Merwyn the vote to issue a further stimulus before he retires. It will be a blessing to the nation, and in time for the royal birth in June.
What should we have instead of Austerity? Well, of course, a jamboree and a celebration would be good, which will help people satisfy their reasonable demands of a growing prosperity. The quicker it is put in place, the earlier the cycle of wealth creation can continue, which in turn will bring money to address the deficit, and the only really practical way of growth. Can you imagine a shop-keeper without cash flow? Nor should the MPC board members see Britain in such a light.
|Posted on May 13, 2013 at 4:09 AM||comments (3)|
The 2008 banking crisis and the collapse that followed could be summed up in a few vignettes:
The two major banks in Iceland, who had invested in two entrepreneurs who were buying up British retailers on the High Streets of Britain, went belly up, leading their Finance Minister to remark some time later that "perhaps we should go back to fishing". The size of the hole was £61 Billion, many times the GDP of that nation.
Then came the blow up of the boiler houses like Bear Stearns and Lehmann Bros, whose chairman Mr Fuld had readied an exit strategy of taking a golden parachute of $300 million, totally oblivious to the small investors in India and Brazil and other places bereft of their investments of lifetime savings.
The stockmarkets at that time plunged hundreds of points.
The next initiative in the Recovery process was the meetings of the G7, then the G20, of discussions of ideas on how to climb out of the mess. A new infusion of approximately $1.5 Trillion was put into the U.S. and European economies, in emergency measures, and slowly, steadily some semblance of normality started to materialise.
Since then, the U.S. has put in a very necessary and prudent stimulus in the form of quantitative easing (QE I, II or III) and likewise the British economy has been blessed with measure of £375 Billion. Currently the Bank of Japan is infusing $85 Billion per month, equalling that of the U.S., who have somehow put in a sequestration of one-twelfth of that, to reduce $85Billion over a year.
Still, there is plenty of money in the system. The British banks like HSBC and Barclays are said to be flush with cash. The stockmarkets worldwide look in a healthy shape, including Kenya and Ghana in the developing nations.
This current week the markets will take a breather, as not much detail is available as to what the G7 and IMF M.D. Christine Lagarde have come up with from their recent meeting in Buckinghamshire.
While there is talk of the stimulus in U.S. being tapered off, the new U.S. Treasury Secretary seems to be calling for a resolution of the Debt Ceiling issue before Labour Day.
Banks seem in robust shape currently, and risk appetite is growing, a good bullish sign in which it is hoped the banks will take courage and loan to small family businesses and young entrepreneurs, and help them transform that mountain of readies into wealth in the long term, creating sustainance for the people and taxes for the nations, and much happiness for all. When people start to practice the law of generosity and become well-wishers to one and all, everyone will prosper. For that I pray.
|Posted on May 5, 2013 at 4:20 PM||comments (1)|
A time will come very soon when the U.S. debt clock hits 16.15 Trillion. That is a self-reminder to the American nation to review its finances, and see what savings and improvements could be made, to eventually balance the National Ledger one day. As is true of all sovereign nations, the national ledgers are very seldom balanced, thank God, for development, expansion, review and progress are activities that are forward looking.
Nations which are having to balance their books and keep expenditure strictly under control due to lack of overseas support typically are tiny nations, with limited natural resources, who have exhausted their credits with other nations and thus become at the mercy of God and the goodwill of friendly nations.
With the U.S., it has plenty of natural resources, a nation that is influential in its friendship across the globe, and in spite of being one of the major developed nations still has plenty of scope for further development. To wit, they are still building extensions to the railways in Pasadena, in California, and with the product developments there, the U.S. in my opinion is fully several years ahead of most other economies.
Many fine houses were lying empty across the U.S. in the midst of a housing meltdown; that has now gradually and surely started to heal. Every month the U.S. is creating more jobs, and the unemployment rate has started to go down. The 165,000 new jobs created in April were something that cheered the markets, and took the DOW to over the golden 15,000 bar which I believed it would vault over (I wrote as much in early 2012).
The only thing that remains is for the U.S. Recovery to continue is the Debt Ceiling II, the date for this seems to be around May the 18th.
It is my assumption that the best course of action would be for the President to exercise his Prerogative in this regard, and sign in, with the full bi-partisan co-operation of Congress, a further figure of 1T. This may even be modified to say 250B over 6 months from 18th May in view of the improving economy and creation of jobs on a wholesome budget. That would ensure continuation of Recovery and happiness and welfare of people, together with creation of wealth through exchange of production and consuming thereof, and money swirling in the system and returning to banks and eventually to the Fed
(through financing and creating wealth).
In about two years, when Prosperity appears in U.S. and the other nations which follow and further Peace, the name of the undersigned may be forgotten, but who cares?
God is our Heavenly Father, and as He has so inspired capable men and women to administer the affairs of nations, He has so inspired scribes to give a helping hand. Today, it is my belief that everything will be fine by the grace of God, and the suggested course of action will lead to a greater Prosperity for all.
I am always glad to hear from my Readers their comments and opinions, and any hints they wish to share with me.