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Durudarshan - Investment Analysis

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The U.K. Chancellor's Budget

Posted on March 20, 2013 at 10:37 AM Comments comments ()
The first day of Spring, and a spritely Budget from Chancellor George Osborne.
 
If the facts and figures given by the Chancellor are true, as of course they must be, then the Budget statement augers well for the U.K. economy in the coming months and years.  It was blazoned as the Aspiratiion Nation Budget, for those who aspire to achieve through hard work and benefit from the government's policies for those who do something for themselves, in a fiercely competitive global environment where jobs can be re-located anywhere. 
 
"All Western nations live in very economically challenging times", said the Chancellor. Yet, British exports to Brazil, China and India are up by two-thirds.
 
Unemployment has been down since the coalition government came in.  For every one job lost in the public sector, six new jobs have been created in the private sector, thanks to the government policies to encouraging job creation and enterprise.
 
This government is reducing borrowing, and helping the nation live within its means.  "The Labour government borrowed £159 billion in its last year in office.  By comparison, this government has borrowed £114 billion last year."  Project figures for the years ahead are on a similar note.  Less and less borrowing each year, reducing as a ratio of GDP.  Which would ensure continuing low interst rates, I guess, and a stable environment for growth. 
 
In this regard, "unconventional monetary tools" would be deployed.  I imagine a trans-Atlantic influence when the new Bank of England boss Mark Carney takes over.  Some indication of the new tools will become clear in June.
 
Government departments are to spend £11 billion less this year.  "The year end rush to spend whatever is remaining in the kitty has to stop".  This seems a sound policy, to curb extra extra ordinary spending before 5th April each year which used to be the tradition.  In hard times, it is essential to use money wisely.
 
On the more positive side, an additional £130 billion will be available from April 2014 under the Mortgage Guarantee Scheme that will enable people buy a house (old or new) under the Help to Buy scheme.  And the Right to Buy Scheme is to be extended, so people can buy their council houses.
An additional 15,000 new Affordable Houses are to be built, and this will certainly bring cheer to many, many people. 
 
This was a brilliant Budget, delivered by a Chancellor who is very much in touch with the aspirations of the people, in a fiercely competitive global environment.  He commends it to the people, and his dropping of the 2p extra on beer is something people can cheer with.
 
There are other good measures in this Budget, which I will write up later.
 
Kind regards,
Duru-darshan.
 
 
 
 
 
 

India's 14th 5year Budget

Posted on February 28, 2013 at 4:57 AM Comments comments ()
Both the Sensex and Nifty have drifted downwards, at the Budget announced by Finance Minister Chidambaram, which allocates increased expenditure by 19 percent to 2014, with a good measure for defense spending as well as additional provisions for Food Secuirty as well as additional provisions for Mid day meals. 
 
It is a Budget that has at least averted the sovereign debt downgrade, although such a downgrade would have been questionable in view of the fact that the debt to GDP is a golden 5.3 percent, making India worthy of a Golden AAA rating, in my view.
 
The good news for the middle class is that for first time buyers, there is a tax rebate of upto 1 lakh on house purchases upto 25 lakhs.  This will put more people on the ladder to house ownership, and provided the economy remains robust, should give a boost to the housing sector.  Demand for housing is of course at a high.  In this regard, a favourable proposal to create a Women's Bank is an Indian first, which will empower women entrepreneurs, and will certainly be the segment to invest in, as women's prudence, thrift and enterprise is a legend.  So, well done to the authorities for creating this dedicated segment for women's empowerment.
 
Cigerettes, liquor, imported cars, bikes and mobile (cell) phones above 2,000 Rupees are going to incur additional taxation, and those who eat in the more UMC air-conditioned restaurants are also likely to pay additional taxes.  There will be a surchage of 10 percent on incomes over 1 Crore, and those lucky people will have to fork that out for only one year.  Imported cars will become kudos, attracting additional taxation, but those who can afford will not be put off from purchasing such luxuries.
 
It seems a good sensible Budget, although the opposition have called it dull, boring and unimaginative.  Indeed the Chief Minister of Uttrakhand says it is a budget that is anti-poor. and makes no or scant provision for the Scheduled Castes and Scheduled Tribes.  It is apparent that the government will have to focus on this segment, and ensure that in a spirit of equality and inclusion, some extraordinary provisions are to be made for these segments, to propel improvements for all, starting from the lowest upwards.
 
A nineteen percent increase in expenditure over the next year leading to the 2014 election will ensure a renewed growth, and if fairly implemented, this Budget will definitely lift the doom and gloom that has so far weighed on the Indian markets.  This is a great positive Budget for growth, and the Finance Minister deserves congratulations.
 
Kind regards,
Duru-darshan.
 

Bailouts and the Fiscal Cliff

Posted on December 10, 2012 at 10:18 AM Comments comments ()
As Spain gets ready to receive its bailout package of 39.5 Billion on the 12th, the markets are wondering who will next ask for a bailout?  Could it be Ireland, Cyprus, Portugal....?
 
Originally I thought Italy would be next in line, but Signor Silvio Berlusconi's announcement that he's withdrawing support for Premier Mario Monti and thinking of standing again for the Premiership has caused upset in the Italian stockmarket.  Today, it has gone down 3.5 percent upon hearing that Mario Monti, the technocrat Prime Minister who has helped Italy steer a steady course in recent months, is considering resigning if his support is withdrawn.  The yields on Italian bonds have started to go up.  How patriotic would it be for Signor Berlusconi to come back centre stage now?  It would be more patriotic in my view for Signor Berlusconi to support Premier Monti's government.
 
The debacle in Misratta and the aftermath, when bond yields just shot up and have had to be hoisted down, is something that will come back to peoples' memories.  It is an episode not worth repeating.  As Italy makes steady headway to Recovery, the greatest act of patriotism would be for the Signor to back the Premier, and the Premier to stay on, confident in the belief that he is steering the right course of action, and without him his country will become rudderless. 
 
Activity from Lisbon suggests Portugal is also hoping for a bailout, as is Ireland, and as is Cyprus.  They probably could do with about 10 Billion for a year each, to lay further foundations for Recovery. 
 
Superstorm Sandy dealt the U.S. a savage blow, right in the middle of the Presidential election.  Hoboken, Staten Island, Lower Manhattan were all badly flooded, and the announcement of 240 Billion of rebuilding by the government and insurance funds must be a morale booster. 
 
A solution to the U.S. fiscal cliff scenario is the issuance of an additional trillion over the course of the next year.  Some commentators are suggesting a figure of $45 Billion per month for buying government securities, in addition to the $40 billion MBS already announced.  I reckon a figure of $60 billion per month for purchase of government securities would be more comfortable, making a total of 1.2 trillion for the year. 
 
Hearing that millionaire households have had to go on food stamps and that the swing voters were affected by Obamacare and the social security net, is a sobering thought. 
 
The U.S. seems on a sound, expansion phase, and amicable agreement on the course of action regarding the fiscal ledger entries and creation of many more jobs per million of investment, will ensure the framework for a continued worldwide Recovery, as all nations manufacture and consume and trade and develop and grow.  As Swami Vivekanada once remarked "Never underestimate the glory of human nature".  And so it shall always be, the outlook for the world remains positive and optimistic.
 
Kind regards,
Duru-darshan.

The Chancellor's Autumn Statement

Posted on December 6, 2012 at 5:29 AM Comments comments ()
Chancellor George Osborne has announced a Statement of measures to be implemented over the course of next year, and his message has been, overall, favourably received. 
 
The stockmarket has gone up, business owners are pleased at the capital expenditure allowances which will enable investment and growth with up-to-date technology, and avoidance of the proposed 3p fuel duty altogether has sent up a cheer. 
 
Working families on the whole will be better off, and those on benefits will not be hard done by, with increases in benefits of one percent. 
 
The proposed measures will help growth. 
 
The studious remarks of the Opposition, when noted and acted upon, would obviously create further growth.  The banks are said not to give their managers 'discretionary' powers in granting loans; this is something that can be corrected, and would introduce capital into the local communities, especially the small shops and traders and restaurants and pubs.  It could revive a lot of businesses as the nation gets into a mood of growth.  With the 1 percent GDP increase last quarter (after three quarters of mini falls, causing a 'double dip' of a puddle variety) confidence seems clearly to be returning.  Even casual observation of people shopping in Romford or Ilford or Green Street, Upton Park, suggests that.
 
The People's  Bank with an injection of a Billion Pounds has been long awaited.  If it actually backs entrepreneurs to scale up and invest in films, music, arts, culture, crafts, and such enterprises, people will say that not only does Britain have talent, it is finding expression and fulfillment too.  That would have a good impact for job creation for youngsters, I believe.
 
The Chancellor's words are a stimulus to growth.  What more could Britain ask for?
 
Kind regards,
Duru-darshan.
 

Just a little negative sentiment in the air...

Posted on October 19, 2012 at 1:37 PM Comments comments ()
There seems to be just a touch of negative sentiment in the air, which, together with profit-taking, have sent the markets heading down. 
 
First, the positives:  No matter who wins the U.S. election, the markets will go up.  That seems to be the sentiment, confirmed by David Blitzer of Standard and Poors.  Same sentiment was being expressed by Chief Analyst of Piper Jaffray some while ago, based on research into U.S. Presidential election years.
 
If Mitt Romney wins, then there's a "hoard of cash waiting to go into the markets" according to David Blitzer. 
 
The economic data out of China suggested a soft landing, a happy picture, with the indicators moving upwards currently, meaning a saucer shaped upturn.  The official China economist smiled benignly as he realeased this information.
 
Some people conjure up the negatives, with reference in the press and media to the Black Monday that happened 25 years ago.  Well, the power lines are clear, communications to brokers have not broken or anything, you can still get pretty full coverage of news on TV and Internet, and the weather....well, it is mild.  Some market participants would be happy for some Black Swan event, then their short bets would make a lot of money.  It may or may not happen, I don't have a crystal ball, nor have I taken any position in the market, so I do not win or lose either way.
 
However, it is my belief that the DOW will head upwards, possibly heading for 13,700 plus towards the end of this month.  Based on the natural trajectory to 15,000 by the end of the year, I start to believe Mitt Romney will win.  I know it sounds absurd to say it like this, but markets and their likely technical movements most often foretell even natural events such as rivers flooding or earthquakes or tsunamis.
On the other hand, even perfect formation on the Ichimoku charts have been known to fail, such as happened at the time of the Fukushima disaster. 
 
All in all, I believe in the positive picture, and the markets and the weather will probably reassure us all next week.  I hope so anyway.
 
Kind regards,
Duru-darshan.
 

Hello, Kieseldv, Ukraine!

Posted on September 18, 2012 at 5:15 PM Comments comments ()
I have received 88 visitors today, who have read 217 pages.  A lot of the visitors have been from Kieseldv.  My friends, I am so pleased for you and your kind hospitality during the Football Cup.  All visitors had a great time, in the midst of a civilized crowd.  In the world's estimation, Ukraine is a regal state, as the name suggests.  I know your nation is preparing to join the Euro, although I don't know why.  The Mother Currency of 17 Eurozone nations is going through teething problems at the moment, and it my belief that it will mature in due time with even more nations under her wings. 
 
In the currency markets, the Euro is referred to as the Vatican Euro, suggesting that it has the blessing of the Vatican, which reassures everyone even more.  Currently the Euro-Dollar is 1.30 or so, having climbed from 1.20 hardly a few weeks ago, after the ECB President Mario Draghi confirmed his intention to authorize the buying of 2 and 3 year bonds.  The U.S. too is in tune, with Fed Chief Ben Bernanke announcing record low rates till about 2015, coupled with a programme of the Fed buying U.S. mortgage-backed securities to the value of $40 Billion every month.  This has reassured the markets, and as you have noticed, the stockmarkets have gone up, and the currencies have been a favourable play for investors and speculators alike. 
 
Whilst I write this, I remember your former Premier Julia Tymoshenko.  How is she?  She is in hospital, I understand, and I am sure she will be treated in a civilised manner, that is to be expected from the authorities of Ukraine.  If she is actually granted a pardon, I hope the noble heart will help bring more admiration for your people and nation.  Maybe she informally overstepped her authority in opening the gas supply to Europe on that bitterly cold Saturday when my hands were turning to ice and people were dying of hypothermia, but in the hearts of many in Europe who realise what a noble deed this was, Julia Tymoshenko will always be regarded as a heroine, and she brings pride to your nation.  Tell her she is remembered here with great appreciation.
 
Kind regards,
Duru-darshan.
 

Huge potential in India

Posted on July 31, 2012 at 4:15 PM Comments comments ()
Today's most important economic news was about India. 
 
There was a huge power cut in the north, affecting 18 of the 26 Indian States.  In temperatures ranging from 23 to 38 degrees Centigrade, this was a terrible experience for the 670 million people affected.  Most normally have their ceiling fans whirling; today, those who did not have generators or back up supply had to suffer the sweltering heat.  The power grid has failed over two consecutive days, slowing down traffic and making people feel miserable.  Power cuts and water shortage have become common-place in India, but not on such a scale.  To say that the infrastructure needs upgrading is not saying anything that is not obvious.
 
The second piece of important news was that the Reserve Bank committee had decided to hold the repo rate at 8 percent, despite the slowing economy.  The threat of inflation is seen as the main concern, but the lack of investment in Indian Bonds and the falling value of the Rupee seem disheartening. 
 
If people are interested in encouraging further investment into India, such as FDI to build businesses which may be mutually beneficial to the investing organisations as well as India's growth, then surely the foreign currencies coming in would be converted into Indian Rupees, and strengthen the value thereof.  In due course of time, that may happen, as more confidence builds in the Indian economy.
India has everything going for it, in terms of demographic mix and resources as well as potential for growth. 
 
The monsoon has delivered less rain than normal at this time of year, and this will affect the crop yields.  Water is depleted in the reservoirs, and its outflow is being rationed in most States.
 
However, the RainGod may show kindness and mercy on the people.  For that, I pray
 
Kind regards,
Duru-darshan.
 
 

Not inevitable....

Posted on July 13, 2012 at 3:29 AM Comments comments ()
I pay some attention to a Chartered Market Technician giving his take on the probability of the  stock market index giving a clue as to who will be the next U.S. President.
 
The crucial period to watch will be between August and October, according to Craig Johnson, of Piper Jaffray, Minneapolis.  Craig's commentary of the technical analysis charts is interesting and very useful to follow up or discard.
 
According to the interview he did on Bloomberg with Adam Johnson and Alix Steel on 12th July, if the U.S. market goes up during August to October, the probability is very high that President Obama will be re-elected. 
 
On the other hand, if the market falls during that period, then the probability of Senator Romney becoming President  becomes high.
 
These are probabilities, based on figures from the past.  Regardless, nothing is inevitable, but the market mood and sentiment will be very influential, perhaps to create a self-fulfilling prophecy.
 
Interesting times ahead.
 
Kind regards,
Duru-darshan.
 
 

The U.S. jobs report... what does it mean?

Posted on July 9, 2012 at 8:03 AM Comments comments ()
The much-awaited jobs figures from the U.S. Labor Dept seemed to dismay the markets last week.  Only 90,000 Non-farm jobs created in June?  Disappointing, disappointing. 
Previous to the announcement, the ADP report was indicating a jobs growth for June of 180,000 jobs.
If an employment agency gives that figure, then I think most would be inclined to take that into account, as they ought to know how many people they have placed in employment.  Probably both figures are correct, suggesting that 90,000 persons who were registered unemployed have found work, and, in addition, another 90,000 who did not hit the registers, have also found work. 
I would be pleased to hear views from readers of this blog.
 
Considering a dental assistant in the U.S. can earn nearly $55,000 and a Physical Trainer $44,000 any number of jobs created ought to be good news - heatmaps of happiness for the people finding work - in the context of new unemployment claimaints falling in number below the average, a good sign, and increasing hourly rates of pay. 
 
The U.S. economy is making Recovery at a gentle gradient, and with the Oil price now seeming affordable, it is probable it will pick up again this month. 
 
Europe seems concerned about a slowdown in China as much as the Chinese are concerned there is a slowdown in Europe.  It is like a see-saw.  If only all the economies have faith that things will improve and nobody wishes to see another recession for a long time, the consumer and jobs creation bandwagon can continue in the midst of peace and plenty.  Instead of fearing a recession, the body politic should be giving the people a message of peace and hope, and, truthfully, that even Prosperity could be round the corner.  An era of optimism would do wonders for all, a self-fulfilling prophecy.  For that I pray.
 
Kind regards,
Duru-darshan.
 
 

A Prophet, a 'spy', a billionaire, floods, the God particle.

Posted on July 5, 2012 at 3:08 PM Comments comments ()
My blogs over last few days have been popular, I'm glad to note.  Between 1st and 4th July, I have posted the following, some of which you may be interested to read as well :-
 
  -  Thomas Sugrue's review of The Last Great Prophet
  -  Today's Inspiration from the Gurudwara
  -  Stephanie Ruhle - CNBC Interviewer ( Correction : she is with Bloomberg)
  -  Floods in Assam
  -  The 'spy' who came in from the cold
  -  The God Particle.  Day of great celebration today for Mankind.
 
You can read more of my other blogs (about 962 so far) at my website,
 
 
Thanks for your visit.  I do hope you find something interesting and informative.
I am always happy to receive your comments.
 
Kind regards,
Duru-darshan
 
Durudarshan - Investment Analyst
 
 
 
 
 

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