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Honest Information, Profitable Trading

Durudarshan - Investment Analysis

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2015 may be a very good year, but caution ahead

Posted on February 6, 2015 at 7:09 AM Comments 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.


Kind regards,

Durudarshan H. Dadlani


(c) Copyright. 



 





Magnificent, the ECB Stimulus

Posted on January 25, 2015 at 5:08 PM Comments comments (10)
The Trillion Euro stimulus announced this afternoon by ECB President Mario Draghi is nothing less than magnificent in my view, and will help create jobs and industry for millions, and turn into wealth.  This stimulus augurs well for the European stockmarkets and for the Euro itself, which it now underpins with a very positive aspect.  It seems to have been announced at the right time, and although the immediate market reaction may not have been wildly enthusiastic, it is a complex stimulus, needing people to understand and digest its implications.

In plain terms, it is 60 billion Euros per month over 18 months, starting from March to September 2016, meaning a total of 1,080,000,000,000* Euros.  This was announced by Mr Draghi at the press conference in Frankfurt this afternoon.

It will serve the 19 nations that make up the Euro Area, or Eurozone, which now includes as from 1st January 2015 Lithuania.   However, it will not be available at the moment to Greece, which benefits from arrangements already in place from the IMF, which gave them two bailouts and numerous haircuts.  Perhaps there could be cross border mergers of some organisations which would benefit all?

There seems enough appetite for additional funds, especially by companies who have not been able to find funding from the banks so far.  This is a ready segment that will be glad to be served by this Stimulus.  As in England and Britain, where Mr Cameron has been visiting various companies, who have received funding now, something similar needs to be implemented in the Eurozone.  Money invested in companies which need capital for upgrades of machinery, or cash flow to keep the factories operating while their customers arrange to pay them, will maintain employment and sustain livelihoods and, hopefully, even create wealth in the long term.  That 'old school' way of trading had died recently in the credit crunch, and could well do with revival.  It may be the clue to bring Recovery back on stream.


This Trillion Euro Stimulus was long awaited, and probably is just in time, now joining the money flow in the U.S., Japan and China, to maintain the worldwide economic Recovery, which shall flourish to Prosperity for all nations.  The next stage surely must be for the BRICS nations to reduce their benchmark interest rates and for the Emerging Markets to do something similar, in due course to be followed by Africa perhaps?  Or even simultaneously, and soon?  Why not?  The national books can become squared internationally, as each nation develops its resources, trades with the other nations, and brings development and growth at home.  Would that not be the most marvellous thing to happen?


I wish you peace and prosperity, to every nation, man, woman and child.


Kind regards,

Duru-darshan


(c)  Copyright.

P.S. Earlier I left out three 0's.  Aw aw aw!


What's behind the stockmarket jitters?

Posted on October 16, 2014 at 11:10 AM Comments comments (6)
I can also wonder on what is behind the stockmarket jitters.

First of all, the Tesco share price fell, on it coming to light that the profits forecast had been overstated by £250 million.  This is a healthy retailer, doing well, although its market share of the multi-billion staple products market is only given up a little bit; prospects may be there for a refocus and recovery.  Also, I believe the overstatement may be much shorter.  This is my private view, after some research of their figures.  I would suggest it is the wrong time that Warren Buffett has sold his stake;  to the contrary, he should have added to it.  (I don't own any Tesco shares, and I have no vested interest to be optimistic about them.  Just objectively, I think now their shares would be a good long-term investment).

Now, the Shire share price has plummeted, wiping off several billions in the stock market.  This simply because of the expected merger is off.  So what?  It still remains a sound pharmaceuticals company, and likely to find another suitor or do well as it is. 

Today, after revealing growth of 3 million subscribers, Netflix has seen the share price fall.  Surely, people expect miracles with profits growth.

Really and truly, the way I see it, the market jitters can be attributed to one main factor hitting Wall Street - the coming to an end of the Quantitative Easing Stimulus, whose last instalment of $15 Billion for October is currently in the system.  The easy money was certainly feeding through the markets, and keeping them buoyed up. 

I believe the DOW will head for 18,000 over the next 18 months, but it will be a slow steady inching upwards.  The $2.15 Trillion fed into the U.S. economy since 3rd August 2011 has done its share of good, creating several million jobs and dare I suggest quite a few millionaires.  The additional stimulus under Dr Yellen's tenure of the Federal Reserve since beginning of this year has been another $400 billion.  This has been phenomenal, and sustained people and enriched them.  A lot of companies have traded well, and have built up large reserves in their coffers.  It only remains for the huge amount of fat in the system to work its way through, and everything should continue to be alright.  The worldwide economic Recovery shall turn to Prosperity, with creation of many jobs even without the Stimulus.  That is my belief, and I anticipate good U.S. jobs figures at the end of the month, although some rotten numbers have been registered currently.  The organic growth of the economy is going to take faith, confidence and a willingness to share.  The big corporations can help their reserves turn into paypackets for people, so that the nation can prosper.  A common prosperity should arrive by November for all Americans, for this I pray.  So long as corporations create jobs and share their fortunes, and companies who can afford pay their workers the minimum $10.10 per hour being championed by President Obama, then of course a Prosperity will come into being, to strengthen further into the future, giving me the opportunity to refer to it as the worldwide economic Prosperity. 


In the meantime, I wish you joy and light.


Kind regards,

Duru-darshan



Farewell Quantitative Easing, Welcome Prosperity!

Posted on October 15, 2014 at 7:18 AM Comments comments (3)
Americans can scant believe that Prosperity is beginning in their midst very soon, especially as the much loved Quantitative Easing comes to an end this month, with the final $15 Billion instalment of the Assetbacked Securities purchase by the government authorities. 

Since August 3rd, 2011 when the Debt Ceiling was raised and approximately $2.15 Trillion of cash flow pumped into the U.S. economy, another $385 Billion has gone in since beginning of this year when Dr Janet Yellen took command as the Federal Reserve Chairwoman.  Men are men and women are women, so in a pluralistic egalitarian democracy, Chairwoman is the correct and respected title, I would suggest.

These are figures that will be in the expanded Balance Sheet of the United States, to be reconciled as the economic momentum develops and revenues to the IRS increase.  Certainly, since the October 2008 crash when the financial system had almost become a vacuum, the introduction of the bailout of major corporations like General Motors, American Insurance Group and others by the U.S. government served the best purpose, to bring stability to the economic system and restore confidence and growth.  That act of faith has paid rich dividends, saving so many millions of jobs.  It became the measure that turned a sliding economy into the thin V support, from whence Recovery built up.  President Bush and President Obama are to be congratulated for taking those wise steps that have now flowered into a blossoming fully fledged Recovery in the U.S., and which provided the hope and stability that has created the worldwide economic Recovery, no less.

A lot of that cash flow of several trillion dollars has gone into purchase of bonds in corporations, helping to turn their 'toxic assets' into valuable assets and correcting their balance sheets, as well as providing much needed housing for people and premises for businesses.  The cash flow loaned to banks has mostly been recouped, but enabled the banks loan on to businesses and entrepreneurs to create the Recovery.
It has been a win/win situation for all.

Now that the Stimulus measure comes to an end, I would suggest enough fat has been created in the system to enable the creation of a healthy number of jobs each month, I guestimate for the next 20 months or so.  I can imagine anything between 200,000 to 250,000 jobs being created in the U.S. each month for the foreseeable future, taking people off welfare, enabling them to create their little part of the American dream, having the satisfaction to work with their bones and talents, earning their way in the world.  Just the economic momentum built up with the extraordinary measures should ensure that, I would suggest.  And a happy happy picture it is, heatmaps of happiness in all the States.


With the Oil price now tending below $85 a barrel - and the market dynamics suggest it may stay there for a few months at least - people will be having more of their hard earned cash to spend on other items than fuel, thereby creating demand and growth in all other sectors, which will register in a stockmarket that will tend upwards to 18,000 over the next 18 months or so.  In the meantime, the markets may be range-bound until there is more and more confidence that indeed things are rosy, and Prosperity has arrived in our midst.


Kind regards,

Durudarshan H. Dadlani



The world waits for the next thrilling announcement from the Fed

Posted on October 10, 2014 at 10:45 AM Comments comments (3)
The world awaits the next thrilling announcement from the Federal Reserve Chairwoman, Dr Janet Yellen. It does not matter that 76 percent of the American population questioned in a recent survey don't know her name, but this lady makes pronouncements which impact the globe and the American economy in particular. 
     What is likely now, will she taper away the total $15 billion, or leave some of it on hold, perhaps $5 billion?  Most people will hope it is the latter.
     The U.S. economy seems in robust shape, with the unemployment figure falling below 6 percent for the first time in so many years.
     The U.S. housing figures indicate some cooling down, as fewer houses are being built and fewer people have bought houses recently, although with the current record-low interest rates in U.S. and Canada, the time could not be better to stake your claim on the property ladder if you have a reasonably good job and can pay the mortgage.  A lot of folks I met when I visited Los Angles and Las Vegas in 2012 had done just that, working hard, cheerful, that they were realizing their share of the American dream, to own a house, an automobile, have good furniture, watch movies, perhaps travel overseas at a future date, send youngster to good schools and colleges, all through working hard, being the best at what they do, and earning their crust.  I totally applaud these worthy people, whose faith and optimism has added to the picture. 
     The world economies have healed, and the one traditionally termed the locomotive has pulled along impressively, creating several hundred thousand jobs a month and creating heatmaps of happiness. 
     Let us not forget, there was a time when diamond jewellers in India were having a hard time when Americans didn't buy diamond rings.  That was in 2009, early.  Now the situation is so much healthier.  People being able to travel has done the world a lot of good also.
     I hear Mr Bernanke is in line to receive the Noble Prize for Economics and Political Science.  Certainly this stalwart with nerves of steel did a grand job introducing the Stimulus and at every occasion magnificently dealing with the questions under intense fire.  He is the Reserve Bank chairman others may do well to emulate.  Of course, other economies may not have the might to implement policies like the United States, but I dare say the Emerging Markets, especially the BRICS nations, certainly have the clout to try and introduce such policies, perhaps experimentally.  I feel sure it would do them a power of good.  I believe the BRICS nations once on board will provide the second leg of the Recovery. 
     Until such time, I can only imagine a sound period of consolidation, with the economic Recovery strengthening from the groundwork that has been laid over the last five years or so.
     Rationally, most people like to be busy, and likewise most economies prefer to be busy.  Peace negotiations, a lower Oil price, and good health returning to the region hit by Ebola (God bless them) will see a rosy picture for the world. 
     I know, the German economy has shown a drop of some 5.7percent in the industrial production, but that may become corrected as demand overseas grows.  People are waiting for the E.C.B. to announce their Stimulus, and I think maybe in another five months all the Euroland nations will have agreed to have the Stimulus, and the Germans introduced a suitable Clause in their Treaty.
Once that is so, the worldwide economic Recovery will continue, with Prosperity beginning in the U.S. (dare I say it?) in November.  Some people are nervous and cannot believe it, as the Quantitative Easing comes to an end, but please remember the substance of cash flow amounting to several trillions has gone into the economy, and that has turned into wealth, being invested in the stockmarkets, bonds, as well as sustaining livelihoods, enabling people enjoy themselves, and creating many millions of jobs in the U.S.  It is the nature of such momentum to create wealth and continue to create more demand and jobs.  I have faith that that shall be so.
     I say once again, I believe Prosperity shall begin in the U.S. by this November.

Kind regards,
Durudarshan H. Dadlani