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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.

If they fix the Debt Ceiling for another year, the good times will arrive.

Posted on November 7, 2015 at 2:02 PM Comments comments (1)
The recent jobs number in the United States was a morale booster, at 271,000 for the month of October.  Compared to past months, it seems the Recovery is picking up momentum.  And to remember that it is well before Christmas, these were not mostly seasonal jobs, those are still to come. 
However, if the monthly moving average of jobs created was to rise above 250,000 that would create joy, but also it would be a sign of solid growth and may translate into increased consumer expenditure, resulting in a healthy core inflation figure.  But it seems it will take a few more months of solid growth for such figures to register, and hence I don't think Dr Yellen would be announcing a rate hike just yet.  Of course, she could pull out some figures from the matrix she uses and is privy to, and justify a rate hike.  That's what keeps us all guessing.

Just from my guestimate of the momentum and likely core inflation, I would bet that the Fed will not increase the rate until, at the very earliest, February-March 2016. 

In the meantime, on 11th December it will again seem as if the nation may have run out of funds.  Secretary of State Jack Lew will likely say a few words on the subject, in his usual quiet dignified style.  The fact remains they need to fix the Debt Ceiling; If they fix it for a whole year, that will save all the senators and the President running about at holiday or Christmas or in the cold months.  It is a recurring issue, and fixing it well for a year will keep the nation warm and happy.  Doesn't everyone want that?

Here in England the whole idea seems a damp squib, and financing and growth can continue at record low rates of borrowing.  Whether funds are available to all to borrow is another matter.  If local bank managers sound out the local business communities and do a fact find, I would suggest they may find a lot of people willing and wishing to borrow - provided the rate offered is keen.  I can see a lot of old buildings being torn down and new ones being built there, in virtually every spot in and around the towns.  When the buildings are ready, you can imagine people filling them up, new communities being formed, with needs for supermarkets, restaurants, schools, doctors surgeries, etc, and an increased demand on buses.  There seem to be signs of unprecedented growth for Great Britain in the near term, it seems a busy place even at weekends and evenings.  There seem a lot of nursery schools ready to welcome kids, but there seems a shortage of trained and qualified nursery school teachers.  Perhaps the government should authorise a fast-track system of training and recruitment, and, with the vouchers they are making available to parents to cover the cost of schooling, the nursery schools should be opened.  They are certainly likely to do well.

For the Japanese economy, I would suggest it is time for them to taper.  The Stimulus seems considerably bigger than their needs, and will have the contrary effect.  Instead of utilisation and growth, it seems to be creating deflation and redundant capital.  In the long term, it will weigh the nation down, and is pretty unnecessary.  The time has come to taper it, I would respectfully suggest.

The policy committee at the Reserve Bank of India may be confounded by the conundrum : Do they reduce the benchmark rate further?  Will capital not flee the markets?  Will people have the guts to borrow more if it is cheaper?  Why let the people suffer a drop in interest income?  Such a medley of considerations must keep some of them amused or awake at night, giving them the opportunity of not making a decision.  I would say to them : the growth will quicken if the rate is cut, the sooner, the better.  People who rely on investment income may see some small drop in their incomes, but you should not allow the majority to suffer not being able to borrow.  Cutting the rate will be good for the banks' turnovers, and will create a prosperity in the nation.  Compared to half a percent or less in the advanced economies, 6.75 seems way too high.  I feel sure in the policy of convergence, the IMF would suggest India should cut the rate.

Once the world sees corrective measures being announced by policymakers and legislators on the above matters, I believe we'll be able to see the continued good times becoming even better. 

Kind regards,
Duru-darshan