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Thursday, August 25, 2011

The Arab Spring

As the Arab Spring winds down into a tepid state except for Syria and Libya,it should have a calming affect on crude and on the world markets.

The rebels have pushed on to Sirte and if they can take Ras Lanuf then 75% of Libyan oil production will be in opposition hands.Still a tribal country,resistance from gadhadfa tribe to which Gadhafi belongs will ensure that complete peace remains elusive,but with Tripoli having fallen the crude prices should settle down into a range.

I strongly feel that the slowdown in the US is overdone and a huge number of columns have been devoted to this topic.Eurozone is in a difficult position to assess as news out of France and Italy is not good and the slowdown in the previous Qtr in Germany means a lot of resistance to chancellor Merkel to spare funds to bail out the rest of Europe.Why should Germany?

India too is in political flux and although i am stoutly behind the anti-corruption movement I do feel that the methods have become coercive and its taking on the shape of an agitation.We all love agitations cause they provide a welcome break,BUT yes if we are to become a clean(and green) country a la Singapore then some pain in the short term is bearable.

The Indian equity markets are nervous and with rumours galore of big European banks failing we remain on the edge.Further liquidity easing in the US will lead to higher commodity prices....a Tatasteel or a Sterlite looks an attractive buy.

Tuesday, August 16, 2011

Blinkered Government Powerless Prime Minister

The circus that has happened in the last couple of days regarding Anna Hazare and the movement on corruption shows a government that seems to be speaking in a babel and acting like a thug.Corruption touches us in India at every stage of our Lives,which starts with the municipal clerk asking for a bribe to hand over a birth certificate to more severe cases.

Most of us seem to take it in our stride and have become deadened to its insidious presence.How many ministers are there against whom some case of intimidation or thuggery is not registered?They exploit the loophole of not being convicted to carry on and riding in cars with a red beacon seems to give them the right to do as they please.

I am glad that its taken a freedom fighter to show that we should awaken our conscience if we are to make this country great again.To make this country what it aspires to be.To make this country a lodestar for its citizens.

In a country where an Olympic shooter wining a medal is given 10 million,the soldiers that guard our borders and who die in the line of duty,their families are on the verge of starvation.Shame!

In a country where a Khudiram Bose was hung by the British for rebelling,today kids call each other a "Khudiram" in case they get caught doing something stupid!Shame!

Either we elect the role models to parliament who will remember the ethics that we so readily give up,be it in a queue or in a school admission or we  need to give a lesson to those who matter that this is not a police state.It is a democracy and the freedom of expression is enshrined in the constititution.

I think Mahatma Gandhi taught Indians the civil disobedience movement just a little too well.The British left but the Indian public refuses to obey general rules as seen when they cross roads or spit or litter anywhere they feel and forget that the public parks etc belong to all of us,throwing the rubbish out of your house into the street will simply blow it back into your own space but I have seen this being done just once too often.

Corruption was always there,hidden underneath the surface of society,just that now its out in the open.The lines from the Bhagwat Gita....".Whatever happened was good...whatever will happen in the future will be good....we came here with nothing and we shall leave with nothing."

After countless millenium,it still rings True.



Friday, August 5, 2011

The World Wont Collapse and India will Grow

 After today's global selloff and since the middle of 2008 I have had more phone calls from scared clients and investors than I can remember in the past couple of years.

Yes the US economy is deaccelerating,Europe is under a mountain of debt,commodities and food prices are at an alltime high.Asia has inflation and infrastructure issues.Come to think of it the money printed since the Lehmann collapse had to show its affect at some point so cannot say that this turn of events was entirely unexpected.

The Positives are the fall in crude and downturn in the commodity circle which for India will have a beneficial affect although in the short term the capex expansion by most firms will cause some pain.

I keep hearing the Finance Minister of India say that Inflation will soon be at 5%.How?With the rapid urbanisation and 9% of agricultural land being turned into urban settlements in india in past 2 years the pressure on food prices will not ease unless new technology comes into play and really quickly.

Since the Israelis introduced drip irrigation I have not seen any new innovations in my village in Punjab and for those who do not know the best place to see the latest tech is to watch the Punjabi farmer in his fields.

I think the value investor in India can try a bottoms up approach in indian equities,commodities or real estate.Ask me if you need specialized advice.

Monday, August 1, 2011

What if the US is downgraded?

The whole of last week finance sector professionals were agog with the Aug 2 deadline to raise the debt threshold in the US.Now that the event is behind us and the fine print is being read the next event is a possible "downgrade" of US by rating agencies.

My thinking is slightly different from the majority view that variously has been predicting a tsunami or a Lehmannish situation.A knee jerk reaction would certainly happen but would it be such a drastic event?I do not think so.

The National Association for Business Economics said its 47-member panel of forecasters increased its estimate for the 2011 federal deficit to $1.4 trillion from $1.1 trillion in its previous survey in November  and the statistics are GDP increase in 2nd quarter of 2011 is 1.3%.Core inflation is also expected to rise to 1.2% by end 2011.

Its been known for a decade that the finances of the world's sole superpower have been in disarray and this is but a last wake-up call.Let us now see where the spending cuts will happen.The Indian IT firms need another 3 or 4 years to develop business in South America,Africa so they will face revenue pressures,otherwise i do not feel a major impact as exports from India are not exactly hi-tech.

What will help is that Indian firms are into outsourcing and that is a cost-save tool not a cost-expend one.China with its total dependency on exports may rather have more to worry and as the example of Chinese engines failing and thereby almost halting the Pakistan railway system shows how much cost can you cut before quality gets affected?

That is the reason i do not worry about Chinese impact on India as the world moves to a more quality conscious,eco friendly environment.But that is another story...