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Honest Information, Profitable Trading

Durudarshan - Investment Analysis

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DOW passes 16,000 - where next?

Posted on November 19, 2013 at 4:21 AM Comments comments ()
Good morning, readers.  As the DOW passed 16,000 yesterday, I didn't write anything at that moment.  Regular readers of my column/blog will surely know that I was one of the few to suggest the DOW would go past 14,000 - then past 15,000 (the magic of 15,000) - and only recently 16,000.  I was of the view that the DOW could even do 17,000 this year, in the next five weeks or so.  A thousand points in say 25 working days, is it possible?  I shall wait to assess the markets further before I would commit to such a suggestion. 
 
In the meantime, I imagine a lot of punters will take some money off the table, and put into alternative markets.  India SENSEX has seen more inflows in last few days.
 
If not this year, then certainly I believe the DOW will hit 17,000 in next few months, on the proviso that the feel-good is assisted by the candy distribution, on which the panel will decide in the US this week.
 
That's all for now.
 
I wish joy and success to all my readers, in Netherlands, Fuzhou, California, India, Kenya, Tokyo, etc, etc.
 
Kind regards,
Duru-darshan.
 
Caveat : Everyone trades entirely at their own risk, I am merely sharing my views.
 
 
(c) Copyright  19th November 2013, Durudarshan H. Dadlani.
 
 
 

Mr Bernanke's penulimate tesimony before he leaves the Fed.

Posted on September 19, 2013 at 5:56 PM Comments comments ()
Federal Reserve Chairman Ben Bernanke made a cordial testimony yesterday, a month now before he is due to step down from office.  Essentially, he restated that the quantitative easing measures need to remain in place until the economic Recovery picks up further steam, but such measures have greatly benefitted the economic pickup and that the economy is strengthening thanks to such measures. 
 
There is nothing but appreciation for Ben Bernanke's handling of the Federal Reserve policies, and I admire this Statesman greatly.  His unique style has helped keep just that degree of suspense that is discretion, while at the same time sharing as much information as has been necessary to bolster stability.  The world stock markets got a boost after his testimony yesterday.
 
It remains to be seen how the Obama administration will fix the debt ceiling issue, which Treasury Secretary Jack Lew has indicated may fall due in October.  Will it be bi-partisan co-operation by the Republicans and the Democrats as before?  When everything is going so well, it is to be expected that they will push through the required votes to help Recovery stay on course, as would be both prudent and necessary.
 
Whoever is selected to be the next Fed Chairman, essentially the pro-growth policies are expected to stay in place. 
 
I have a hunch that the Dow Jones Industrial Index will either shoot for 17000 by the end of the year, or head up for 16000.  What the mind of man can conceive and believe, it can achieve.  I sense it will be possible.
 
Kind regards,
Duru-darshan.
 
 

Forward guidance and the UK Housing market

Posted on September 14, 2013 at 6:59 AM Comments comments ()
There is palpable renewed confidence in the UK economy since Mark Carney took over as Governor of the Bank of England.  His forward guidance that the record low interest rate of 0.5 percent would hold until such time as unemployment falls to 7 percent implies a very stable environment in which people can borrow and grow their businesses and add to their property portfolios.
 
Some forecasters believe we are in for another three years of this very favourable environment of low interest rates, and this has been registered by the pick up in the housing market.  The FTSE has seen healthy volatility and seems to wear a rosy glow. 
 
Rising house prices are of course not favourable to everybody, as a lot of people become sidelined, unable to buy even their first house while those who are already on the ladder bask in the glory of ownership or further improve their wealth by remortgaging and investing in the Buy-to-Let market. 
This is where the government can bring in some mechanism where priority should be given to First Time Buyers and Growing Families Who Need to Move to a Bigger Property.  That would bring a lot of stability to the market, and ensure a bubble is not created, where some people and corporations may prosper for the meantime but would not be appropriate for the economy long term.
 
The London housing market registered a gain of 0.9 percent last month, one of the healthiest gains for some time.  The availability of mortgages and especially re-mortgages at record low interest rates is the cause for the euphoria. 
 
If a mechanism is introduced through legislation to favour first time buyers and big families as I have suggested above, maybe it will turn into a celebration for more and more people.  The housing supply would help those in need, and curb the unnecessary speculation.  Payment of ever-growing rents from the public purse to buy-to-let owners is merely dishing out national wealth to a small minority of people, whose tenants become dependent on the social security for their lifestyle.
 
The interest rate is at a record low in response to a need for the economy to pick up, as a stimulus, and wealth will only be created when money is employed to create additional enterprise.  In this respect, the banks will be doing their job fine if they pro-actively start to lend money to businesses and entrepreneurs in each local community, thereby enabling people make a living, create jobs in the local economy, and generally give a boost to the whole economy.  When people are purposeful and busy, they have to use transport, buy food outside, dress up well and even buy a few luxuries. 
 
The future looks rosy.
 
Kind regards,
Duru-darshan.
 

Oil price seems far too high to sustain Recovery

Posted on July 10, 2013 at 12:51 PM Comments comments ()
The price of the West Texas Intermediate and the Brent crude, traded on the International Commodities Exchange (hence ICE) seems to be spiking upwards and will probably match any time soon.
 
The situation in Egypt may have caused that spiking, but since Egypt is not a major oil exporter, there can be no logical reason for the price of oil to be so affected.  However, perhaps the excuse is good that both prices move together in tandem, to create a global parity.
 
The Fitch downgrading of Italy's rating today may be contested; however, it indicates the weak state of the Recovery in Europe.  Similarly, the news from China that their boom is not so strong as figures had previously indicated (due to numbers which had been inflated) shows there is euphoria amongst the traders.   This brings a reality check, especially for the Oil price bulls, who perhaps will ignore the plentiful supply that currently prevails and the strategic oil reserves that are always there and have not been utilised for a long, long time. 
 
Why Oil price should be up under the circumstances can only be explained by some traders and commentators, whose kudos will be to make a fast buck or get some furthering of controversy on the grades and quality of oil.  Great talking points, but not anything to help the worldwide economic Recovery, which would suggest the Oil price ought to be lower.  I imagine the OPEC economists and Ministers would agree, to sustain their own economies on a growth phase.  If the rest of the world stalls, the reduction in their GDPs will automatically have an effect on the OPEC nations as well.  The world is a joined-whole, where development and prosperity moves hand in hand for all together. 
 
I have previously suggested that the Oil price needs to be under $85 a barrel for the worldwide economic Recovery to be sustained.  At that price, most of the infrastructure development in the OPEC nations can be viable, according to several Ministers comments that I have noted previously.  The current spike I hope will be only temporary, until the price starts to  trundle down once again.  Market forces and the situations worldwide will hopefully prove favourable.
 
Sometimes the numbers of contracts traded at higher prices are so thin; perhaps the reporting price ought to be based on a wider number of actual sales, from a reliable source. 
 
I will be pleased to receive your comments on this issue.
 
Kind regards,
Duru-darshan.
 
 
 
  

The world is swimming in money.....!

Posted on June 25, 2013 at 6:56 AM Comments comments ()
According to Reg Varney, the Fox news commentator, the world's central banks collectively have pumped in some Fifteen Trillion Dollars into the economies over the last few years.  This is a hugely interesting figure...it should suggest the world is swimming in money, and not in need of further stimulus at all at all...
 
So far as publicly available figures indicate, the U.S. raised its Debt Ceiling by $2.15 Trillion Dollars on 3rd August 2011, and thereafter via QE 2 and  QE 3 by a further $85 Billion a month, which has been trimmed by 1/12 since February 2013 since the Sequestration cuts kicked in. 
 
In the United Kingdom, some £375 Billion of Credit Easing facilities have been introduced by the Bank of England, all told, till currently.
 
I wonder which other central banks have printed that gigantic amount of cash and released it into the system. 
 
The current figures from Russia indicate a slow-down there, with GDP figures progressively being downwards, mainly due to lowering Oil prices on which the economy relies so heavily.  Oil prices in the global context are of course likely to head down further, if recession is to be avoided once again.
The current oil stockpiles in the Middle East and the Strategic Oil Reserves would corroborate this scenario, and it can only help the oil exporting nations to keep the oil price low for some time till economies can pick up again. 
 
To avert a slow-down at home which would impact the world, I believe the BRICS nations, with the exception of China, should consider a generous cut in the benchmark interest rate. I would suggest, that is the silver bullet, and they ought to utilise it.
 
China under the Rising Star of Chairman Xi is bound to do well and he likes progress and prosperity for his people; however, they are unlikely to keep on manufacturing goods cheaply and ship them out to the rest of the world, and on credit at that.  A greater demand and consumerism in China itself is likely, and a re-focus is probably causing the current mild hiccup.  It is a matter of record that when Honourable Xi was a rising star in his party, his comments and suggestions created a boom.  I cannot believe that now he is in charge, anything but the best will be possible for China. 
 
With increased trade between nations, and extension of credit facilities and investment into one another's cultures, a great hope of continuation of the world economic Recovery is always bright.
 
Kind regards,
Duru-darshan.
 
 

What should we have instead of Austerity?

Posted on May 23, 2013 at 5:33 AM Comments comments ()
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.
 
Kind regards,
Duru-darshan.
 
 
 
 

My blog posts over the last 30 days

Posted on May 16, 2013 at 7:35 AM Comments comments ()
Dear Readers,
I am very glad that I have so many readers who regularly visit my website and check out my blogs.
For your continued reading pleasure, I wrote the following blogs recently, in the last 30 days :-
 
   Interest only mortgages, what's the fuss?
   RBI repo rate cut of 0.25 percent (25 basis points)
   This is time for buyers to support Bangladesh factories
   Time for the Presidential Prerogative, I believe
   Ramdev shop Ilford address
   The Queen's Speech 8th May
   How does money get to the real economy?
   Wear a silly hat and sing a song
   From 2008 to Recovery
   When the monetary expansion stops, does the party end?
 
What was Cinderella told?  Is the beautiful carriage going to turn back to a pumpkin?
Is the slipper going to lead her Prince to her?
 
I hope my blog posts will provide you some amusement.
 
Kind regards,
Duru-darshan.
 
 
 

From 2008 to Recovery

Posted on May 13, 2013 at 4:09 AM Comments comments ()
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.
 
Kind regards,
Duru-darshan.
 
 

Interest only mortgages, what's the fuss?

Posted on May 2, 2013 at 6:40 PM Comments comments ()
I don't see what the real fuss is about regarding the Interest-only mortgages.  
 
At one time, people used to buy interest-only mortgages side by side with an Endowment policy, that would hopefully build up and mature into the principal sum owed on the mortgage.
 
Then, people did a smartness.  They cancelled the endowment policies.  That meant their monthly outgoing was lower than on a Repayment mortgage, and they had relative security of a roof over their head which was cheaper than renting.  And that is the light an Interest-only mortgage should be looked at.
 
Often, it is cheaper than renting, and if there is a surplus over the price paid to buying price of the house, that's the icing on the cake.  If not, at least it is a secure roof for as long as you continue to work hard and pay for it, meaning it is cheaper than renting and you are your own landlord.
 
So if it is cheaper than renting and you have pride of ownership, then at the end of the mortgage term if the house doesn't belong to you should not be such an awkward question.  That's the reality of it.
 
However, if property prices improve (and they probably will in England over the next four year I believe, going by previous house-price cycles) then there may to nothing to worry about.
 
The U.K. economy will recover and strengthen in the coming months and years, as growth continues in the U.S. and China, not to mention huge growth in Africa (where they regularly discover some hidden Oil resources, potential for building towns and railways, etc, etc) and an improved outlook for India, in my opinion, where the current UPA Congress government has published figures which show a steady improvement in standards of living, declining mortality rates, better nourishment for people, it is such a promising picture....If the Oil price is cheaper, all economies will grow and prosper, including the oil exporters, who will have sufficient income to sustain their infrastructure growth and prosperity of their people. 
 
Look forward to the future with optimism;  the ECB rate cut today to half percent should give added impetus to growth in the Euroland, to complete the global picture.
 
Kind regards,
Duru-darshan.
 
 
 
 

Silly hat store song

Posted on February 19, 2013 at 12:12 PM Comments comments ()
Yes, it is that kind of day, when business is slow, yet somehow the store assistants feel so moody they are making customers turn away.  Okay, probably they are just window-shopping, but they may buy in the future. The idea always is, let the customers soak up the image of whatever they enjoy looking at,
then in the future when finances permit, they'll come back and buy it.
 
The silly hat store song is the wisdom of one of the Waltons of Wal-Mart. Nothing like lightness to cheer
people up, and then something happens, they buy what they like. So, wear a silly hat and sing a song!
 
Honestly, the stockmarkets have been in a long-term bull trend since the 1930s, and will probably continue on that trajectory. That is the observation I made on my Facebok page after visiting the Market Technicians meeting yesterday evening. When I saw the chart of the S&P 500, a lightness descended upon me. Suddenly, I felt very very optimistic. Everything, I believe, is going to be fine.
 
The Oil price is a tad to high for propeling Recovery, including in the Oil producing world. So, there we have it : we can't al eat cake and charge a lot for it. The oil price ought to be lower, with warm weather and growing stockpiles and the SR. Don't need someone from the CIA to tell us that, surely?
 
The Japanese like the U.S. are puting more money into the system, to maintain a good standard of living for their citizens. People should just enjoy it. Grandchildren in future generations will appreciate our aplomb.
 
Someone was going to upgrade his mobile phone and buy a suit, when he got a text message that his job interview had been cancelled. That would not have happened in the olden days, when people didn't have mobile phones! I would say the world is communicating too fast for its own good. Slow down a bit of the new tech sector, and breathe life into the real world, where people eat, drink, worry, make merry, wear suits, work in ofices with desks and chairs - and use computers, occasionally.
 
Kind regards,
Duru-darshan.
 

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