Thursday, September 29, 2011

Gold or Crude?

I have been following the commodities markets for a while now.Unlike the 'specialists' I leave the predictions to the pundits.Yet the feeling remains that the co relation between commodities is a topic that needs more exploring.

Everytime I switch on the television someone or the other is delivering a monologue on why they think what will happen.Same with long winded columns in the pink papers.

The Economic activity in the US is definitely slow but nowhere near a double dip neither has it stalled.The growth concerns of the Global Economy are frankly overdone.For the year I would buy crude and sell gold at current levels with the expectation that a growth of anything over 2% in the developed world and 7-8% in the developing BRICS economies would revive crude demand and the overlong speculative positions in gold would reduce.

Listening to Jeff Imelt say that the confidence on the ground amoungstUS cos is greater than it seems from commentors is a very intuitive comment.I am yet to see any demand destruction in India and even the Chinese are aiming for a soft landing in growth rates to bring down inflation and till now there have been no drastic repercussions.

Again the retail investors are sitting on the sidelines and not buying frontline stock,some of the top companies are available below 1 of Book Value and a PE of  8-12.Are they repeating the historic mistakes of the past?

I feel 8 to 10 months down the line a lot of investors would be rueing why they did not start investing...but then thats what happens all the time.....!

Thursday, September 22, 2011

The World is Not Enough

Interesting times we live in.Is the US in double dip?Is The EU finished?What will Greece do next?Is Germany faltering?Is the Indian Rupee back to is familiar level after half a decade?

These and many other questions have roiled the experts and cast an uncertain net over global economies.The Political will and talent to face the crisis and resolve is missing unlike 2008 and that seems to be the biggest impediment.I do not see inflation going down quickly as the population explosions of the last two decades have created strong demand pressures and it seems the Keynesian policy of curbing money supply isnt working any more.

2011 has been a year of natural disasters viz.earthquake in Japan and these have added to economic burden on the respective economies.What surprises me is how quickly the experts predict that the worst is over and the minute the markets fall they assume the worst.

Europe is bad and will remain so for some time,USA will grow like a tortoise.South American and African economies will take time to create an impact.What is China doing?For 3 months their manufacturing index has been in the red.But I do not seen an implosion in China and that leads me to believe that there will not be any explosions in world economies.

For India-natural resource(and I have talked so much about this in previous posts)remain the key and any fall in the commodity cycle bodes well for us.Our exports are now majorly out of the US-EU bloc so the danger of a slowdown is exaggerated.

The Banking segment in Indian equities has seen a 30% correction and at current levels most of the private sector banks are an 'investment'buy,not so much the PSU banks that have the burden of "priority sector lending" and various other government provisioned schemes.

Unlike experts I believe we will remain in flux in this decade with problems of finding new technologies,resources,medical advancements and finding clean fuel to run the world.With sundry 'Arab Springs' across the world,politically it will be interesting to see how the new blocs shape up and like a post-USSR world we might just see one post-NATO.

Thursday, September 1, 2011

Military Economics:India and the Rest

So the rebels are on the verge of Sirte,the last Gaddhafi stronghold,yet the urbal warfare that will surely follow will be chaotic,crazy and with no guarantee of end results.Speaking of which reminds me that the one army with almost half a century of tackling urban warfare,be it in deserts,mountains or tropical forest areas,cities and the outback-The Indian Army,is yet to have a written war code.The few officers I spoke to either were not aware or its really top secret.

The US army fighting in Iraq,Afghanistan has shown how many casualties can occur even in the face of overwhelming firepower.Their contacts with the Indian army have resulted in join exercises but no serious effort at the kind of "hearts and minds' campaign run in Kashmir or even in Nagaland,Mizoram and Assam.

Yet our politicians have not shown the desire to use the Army as an economic tool.My friends who have served in the UNPROFOR(UN Peace Keeping Force)just reckon that we do not take on social projects unlike the Chinese army and are content just being policemen.

The Chinese do not even have a decent air-carrier and in the next 3 years are incapable of even landing their infantry across the Strait on Taiwan,so poor is their Naval capacity.Yet they push into Africa and the middle east and are slowly encircling India with spy stations in Burma,Sri Lanka and pakistan.

I for one am all for an agressive expansion policy where Indian foreign policy initiatives should have a mobile strike force capable of reaching any part of the world in 72 hours.Having seen the China border in Sikkim and interacted with the 1/4 Gorkha,1/6 Dogra,293 field Artillery,63 mountain Brigade....I know how poor the basic infrastructure of the average jawan is.Snow boots are only for those on duty and with special permission.Yet man for man our jawans are the best in the business and they overcome these issues through sheer courage and perseverance.

Securing Natural Resources in the future is a battle that will involve corporates and nations and we cannot be a superpower unless our share is safe!Those guarding are borders have a close involment with the stock markts and it will only get more pronounced.