28 May, 2009 | by
Topics: Economy, Global

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Some of my friends and colleagues are busy trying to figure out what could be the shape of the most eagerly awaited recovery. The debate is whether we are going to see a V, W, and U or prolonged I__I shaped recovery.

 

There are some who are suggesting we are probably going to see a V shaped recovery then there are those who are predicting a U or prolonged U shaped recovery and yes there others who believe we might see a W shaped recovery. Boy! Go Figure. Someone has to be right but then I wonder isn’t this all a bit premature? Aren’t we getting ahead of ourselves on making such prognoses or am I simply being Silly?

 

Let’s find out, shall we?

The shape of the current economy could probably give us some clues as to what the shape of the recovery might be or at the least we could rule out some.  To get a good estimate of the health of the economy let us look at some of headline news during the week ending Friday, the 15th May 09.

We will start with the numbers out from the European Union.

According to European Union’s statistic office the GDP in the 16 member Europe region fell by over 2.5% from the fourth quarter, the steepest decline in over 12 years. This was above the market expectation of continue reading »

17 Apr, 2009 | by
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All the talk about Recession and now DEPRESSION can make anyone nervous. Wall Street “ Pros “ make their  predictions, and in doing so, create more chaos. This sentiment is probably shared by most folks on the main street.  The market is behaving like a Yo-Yo. To get a perspective, let’s look at the rallies we had in the past week. One wonders, is this a sustainable rally or a one off, I want to feel good BEAR market rally. We are seeing markets rally despite of all the negative NEWS. One might argue that the Market is always FORWARD LOOKING. Which begs the question, is it forward looking or just SPECULATING?  Let us just look at some of the headline stories of March 09, to get a perspective. GE downgraded; Germany’s growth collapsing by a record since world war II; UK and France Industrial output at lowest in over four decades; Jobless rate in the US reaching 10% in at least three states; U.S. household net worth plunging by a record $ 5.1 trillion; Japan’s GDP shrinking by over 12% annually; World Bank is now predicting a negative global growth in 2009. In spite of all these very negative news we saw the markets rallied.

Though, we saw the markets back in the RED again on 27th of March 09 after 5-6 days of consecutive rallies one could argue, what was the basis of this rally? Well may be some “INVESTORS” were expecting the worst and they believed these news were not that BAD after all? The launch of TALF and TARP program also probably helped carry the positive sentiments. The consensus view is that these programs would help but the reality is, we have a lot of continue reading »

28 Mar, 2009 | by
Topics: Economy, Global

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The markets seem to be questioning the government’s ability to find a workable solution to this current turmoil in other words government’s ability to find a FIX. And this is becoming increasingly evident by the way markets have reacted in the past few weeks. Al though one might say that the market itself is INEFFICIENT by design and DYSFUNCTIONAL in the current environment. And there are also those who would say that the whole MESS was created by the same market participants themselves in the first place. People who thought the party would never end and carried on with their reckless business practice. So going by the norm that the market is always right is a probably flawed perception? Well, whatever one might say, it’s hard to entirely disagree especially when we have a market that is increasingly behaving like a yo-yo. It either gets too optimistic or finds itself in a fluke rally only to shed all its previous gains or it takes an extreme negative view on everything loosing foresight.

Some would disagree with the above observation and some might agree. Whatever side you are on, one can safely say that without government support the market may not have survived.

But even with government support the market is not working as it should. continue reading »