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Durudarshan - Investment Analysis

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What are the chances of the worldwide economic Recovery continuing this year?

Posted on January 2, 2016 at 11:19 AM Comments comments (16)
The chances are pretty decent of the worldwide economic Recovery continuing this year, with the promising possibility of enhancement.

Japan seems to have decided to continue its Stimulus, running at some $85 billion a month.  This is gigantic for the size of their population, and guarantees the highest standards of living in the world to all Japanese citizens, plus a growing influence around the world, where their capital is likely to foster growth and development.  For example, they have offered $35 billion to India for joint venture in developments of infrastructure, and this will certainly add to Japanese GNP.

India has done joint venture and co-operation treaties with Germany and France, to help develop some of the 100 new cities that Pradhanmantri Shree Narendra Modi announced at the beginning of 2015.  Since then, he has visited China and Russia, and is signing up co-operation and trade agreements with every likely nation, including many in Africa.  As a lot of Indians lived in Africa and grew up there, it seems India is taking an altruistic stance, wishing to repay with gratitude to their African brothers and sisters.  This is a laudable gesture, and will enable the inherent and huge potential growth that is in places such as Lagos and Zimbabwe. 

China too is extending its sphere of influence, Hon Xi Jinping visited so many nations and signing up trade and co-operation treaties.  I can imagine joy for all these nations, where they will have expertise been made available to them, together with the machinery and transportation to fully benefit from their resources as well as create infrastructure developments which they so badly need.  How can people not imagine dams, electricity, drinking water available on the doorstep, schools, dispensaries, hospitals, hotels, housing, tourists.....thriving economies....where God has blessed them with the rich fertile lands, mineral wealth, green vegetation, fragrant flowers, livestock to provide them plenty of milk.  Africa is most likely to come up with the most number of billionaires soon....or if not, at least top social entrepreneurs who will instead contribute to their lands through holding together and creating business enterprises which serve the communities.  If not dollar billionaires, these will be the enlightened spiritual billionaires who will do great good for their communities....at once, their people will have increasing standards of living.  If the local African banks can back these entrepreneurs, they can create the development and wealth and growth that is the potential.  I pray all these people receive the rich blessings from God.

The United States has steadily grown from the dark days of the 2008 meltdown to today, where the economy seems to have been totally restored, and is growing, with confidence, more jobs, more enterprise, more homeowners, more cars......Now the Fed will just need to fix the Debt Ceiling (in March, it seems).  If they just expand the balance sheet to January 2017, the Obama administration will be home and dry, and all the senators and representatives can continue to collect their pay checks. 
The alternative policies of the Tea Party crowd or Republicans like Donald Trump would see Obamacare repealed, and poor students being sent home due to lack of a free lunch at school.  Those dark days caused due to sequestration are something that is best forgotten. 

I pray Hillary Clinton shall become elected as the President at November 2016.  Simply, it seems her destiny.  It would resonate with the times and the perceptions of people today, everybody seeking self-expression in a democracy.  Her election will enshrine the highest achievement in gender equality.  That is a truth the people will not wish to hide, nor deny themselves. The time has come for this Democrat to rise as the dove, and sit in the highest office in the land.

She was very successful as a peacemaker in the Middle East when she was the Secretary of State.  She has a natural gift for making peace agreements, and people trust her.  She is a natural ambassador for peace.  The world atmosphere will change when she becomes President, the whole tone of political relations will change, I believe, for the better.  It is up to the people, to honour her, and elect her to the White House. 

The One Trillion Eighty Billion Stimulus that the European Central Bank has rolled out has the promise of being extended beyond September 2016, as announced by their President Mario Draghi recently.  That will offer ample scope for upgrade and innovation by the companies in the Euro Area (and by extension Europe) to meet the challenges of these times.  On that note, the one thing the world is waiting for is the Juncker Plan.  With reforms under way, Greece must surely be ready for it.

The low Oil price has depleted the reserves of the oil exporting nations, and their budget deficits have been bigger than envisaged.  That suggests they will review their stance on cutting productions, and introduce some cuts before long; their stance has hurt their purses deeply, so some change may be expected.  Russia too could follow suit, unless they are happy to foster a recession at home.  Common sense would suggest oil price could begin to rise.....but when is only known to the bigwigs in OPEC and Russia.  It is past the post-panic stage; it seems it is a time when they must be regretting not cutting back production earlier.  And there would be no loss of face.  Economic reality seems pretty harsh.

May I wish you good health and joy for the New Year.

Kind regards,
Durudarshan H. Dadlani

(c) Copyright, but may be freely shared.

The Oil price - what's happening?

Posted on November 24, 2014 at 4:05 PM Comments comments (7)
I had suggested a few months ago that the Oil price should be down, as had Oppenheimer chief economist Fadel Gheit.

Now it is down, well below $85.  At this level, I believe it is overdone, now at around $76 for Brent Ice and $71 for West Texas Intermediate.

Most of the economies who export oil would not find it viable to be producing at $70 a barrel - there would be no profit.

The only exception is Saudi Arabia.  Some have suggested that they would be profitable producing it at an even lower price.  However, the supply and demand dynamics as well as the political advantage would tip outside their interest, and economically, they would be throwing away their clout in the market by making it cheaper.  Under $70 a barrel will hurt a lot of the Oil exporting nations and their balance sheets.  Their infrastructure development projects would probably come to a halt in a short while, and that - forgive me pointing out - may induce a contraction in the world economy, that most people would rather not see.

In their own best interests as well as that of other OPEC nations, this Friday's meeting in Vienna I predict will produce a tightening on production quotas to restore the value of Oil. 

It is suggested that Russia may be reducing their production by about 300,000 barrels a day; if Saudi Arabia cuts their production by around a million barrels a day, the demand-supply dynamics may restore the price upwards.  The winter in the Western hemisphere is predicted to be cold, which will necessitate more fuel use.  If the price is restored upwards, that in fact would be best for the world, so all economies can continue as before (and better for those obtaining Oil at the current lower prices) without harming anyone too much. 

The world will be waiting for some sensible decisions in Vienna this Friday.

Kind regards,
Durudarshan H. Dadlani

www.durudarshan.co.uk/blog

Taper, Stimulus, 12, 20?

Posted on July 3, 2014 at 5:20 AM Comments comments (5)
As the DOW is just a short distance from 17,000 all are looking forward to great jobs numbers in the U.S.  A ballpark figure they say is 300,000 new jobs - if such a number have been created for June, wonderful.  If not, a reason not to taper, or not to reduce the QE, which is currently trimmed down to $45 billion per month.

On the question of the reduction is QE, I would frankly say that any more reductions will hurt the economy, and set it back, precisely when it is poised for achieving the best come-back to total Recovery, which I believe will take another six months or so.  In the meantime, it may be my suggestion that Dr Yellen either increases the figure by $5billion a month (that would take care of the social security aspect) and also to consider the rationale that the easing was introduced over a period of 20 months, hence the taper ought also to be farmed out over 20 months, and not speeded along over a period of 12 months.

Everything being equal, the exuberance of the markets will very probably take the DOW upto 17,000 a beyond today.  The good news is both expected on the jobs front and predicates the strength of the underlying Recovery.

And the goods news I think may be that the DOW will go even beyond that in the foreseeable future, with the adjusted stimulus measures in place.

Go on, Dr Yellen, cheer the markets on, and adjust the figure so that it helps achieve total Recovery.

Kind regards,
Durudarshan H. Dadlani


The macro shifts that could help Recovery

Posted on May 13, 2014 at 3:59 PM Comments comments (12)
The U.S. stock market has recovered and gone beyond where it was at the marking point in October 2008.  I hear that even Lehman Brothers continues to make huge profits today.

The job creation in America last month was a bright number, at 300,000.  My suggestion is if such a number was created for another five months, it would be reasonable to say that the economic Recovery has strengthened significantly. 

No, that would not neccesitate further tapering.  I am of the opinion that Dr Yellen needs to perhaps increase the QE by about $5 billion a month for the foreseeable future, until Recovery is complete. 
At $45 billion a month, there is a shortage for the meantime to fund the social aspect, and cutting would have a similar impact to the dreadful sequestration, when poor students were being sent home because there was no provision for a mid-day meal for them.  (Of course, the wisdom may be to ask them to bring their own lunch and provide them the opportunity for education, and keep them from turning to delinquency).

The U.S. housing market seems to have stabilised, but has still scope for improvement.  While foreign investors and hedge funds will avail themselves of these opportunities, the American households are still holding to wait and see that there is sustained recovery in the jobs market with prospects long-term before they start to buy houses.  I of course would suggest that they should consider now, when rates may be just edging up a little from historic highs and prices remain affordable.


On this side of the pond, in the United Kingdom, the housing market has just become stable.  I don't see much upside this year, in view of cut-backs in social security for housing.  A lot of the estate agents relying on government funding for housing have closed shop; and I see a few landlords putting up their big houses for sale.  The time of easy regular income for landlords seems to be now over.  It may be a good chance for the government to provide housing to deserving people on low incomes if the rents are actually downwards from the recent highs.  That would make sense to the government purse as well as tenants.

Other than that the economy seems to be quite robust, with creation of jobs and employment opportunities for many, together with en masse creation of apprenticeships under the guidance and friendly policies of the Cameron government, which has been one of the most people sensitive government the Tories have formed so far.  The multi-cultural cohesion and contented atmosphere is something to be appreciated. 

The Greeks have got their economy improving, with 10 years Bonds at a yield around 6 percent.  Not many moons ago, the yields were an exhorbitant 30 percent or so.  The generosity of the European Union in bailing them out played a tremendous part in helping this situation to be reached.  All European nations, flowers of the same bouquet, must rejoice.  Spain is also seeing signs of improvement, and now that I hear of KKR looking to fund some Spanish bank, I guess the economy there will start to improve quite rapidly.  The huge opportunity is there, for people who like the good climate and culture, to buy properties there perhaps for retirement, and even start businesses there, which could be a way to create jobs in Spain. 

As governments adjust their policies to allow more immigration, especially to parts which are sparsely populated, more young blood can settle and rejuvenate the economies of the advanced nations.  The ageing populations need looking after, and the young immigrants would be happy to come and work hard and pay their taxes, buy houses, cars, books, TVs, etc, etc.  The economies would pick up.  That will I believe be the second leg of Recovery.

I believe the future is very bright, as Recovery will turn to Prosperity, which could be even within six months.  At least I pray for that.

Kind regards,
Duru-darshan.




Contact at Facebook: Durudarshan Dadlani

Posted on March 2, 2014 at 4:19 PM Comments comments (97)
My topical comments are on Facebook.  Please connect and read on there.

Markets take a breather pending US fiscal deal confirmation.

Posted on December 20, 2013 at 4:13 AM Comments comments (7)

Hello Everybody!

Posted on December 19, 2013 at 9:09 AM Comments comments (3)

Oil price pretty high

Posted on December 2, 2013 at 12:51 PM Comments comments (7)

I wrote a blog yesterday, which disappeared!

Posted on November 27, 2013 at 5:32 AM Comments comments (9)

Where next for the worldwide economic Recovery?

Posted on November 26, 2013 at 8:04 AM Comments comments (9)