Why Warren Buffett is so right in the timing of his entry in to Europe:

According to the ECB President Draghi euro area annual HICP inflation was / expected to be 

  -0.6% - January 2015

 -0.3 % -  February 2015,.

0.0 % in   2015

1.5 % in  2016

1.8 %  in 2017

"Supported by the favourable impact of our recent monetary policy measures on aggregate demand, the impact of the lower euro exchange rate and the assumption of somewhat higher oil prices in the years ahead, inflation rates are expected to start increasing gradually later in 2015."

For 2016, growth of 1.9% is now expected, up from a previous 1.5%.

It looks like it is sell and buy time for the euro.

Without any risk or responsibility.

Warren Buffet's helping hand to Draghi in turning Europe around?

 Why is Warren Buffet now investing in Europe?

With advantage  Draghi situation in the ECB council, and steps towards a  more meaningful monetary policy, Europe looks good for value investing. Key interest rates are at their lower end and cost inputs would be quite attractive, rendering European companies more competitive..

With outright purchases of securities, and the launch of an expanded asset purchase programme, there would be an adequacy of liquidity in the euro zone for some time.   The combined purchases of public and private sector securities amounting to €60 billion per month is from March to  end-September 2016.

According to Draghi, January 2015 "Bank Lending Survey provides positive signals, showing a further improvement in credit standards for all loan categories in the fourth quarter of 2014"  and the euro area has also seen "a measurable improvement in indicators of business and consumer confidence."

 With demand for euro assets, dollar might get some respite. 

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The China rate cut and India.....

Yuan fell after the Chinese cut interest rates again. China is staring at possible  fears of  Japanese style competitive price cuts by vendors. Equity stocks responded positively  as rate cuts mean reduced costs. It just is also a signal that the Chinese currency will be cheaper and that is quite a portent of competitive depreciation. Dollar policy makers may  not like that bit although one might just about like a good growth figure from China from a global perspective.

There is an attempt by India to showcase that it has exceeded the Chinese growth rate and earn brownie points on being the fastest growing economy in the World. IMF comments are being  quoted in support. This seems unwarranted jingoism- Ghana once had 9% growth rate!.

India's revised GDP figures put the growth rate at 7.4 %  after recent changes the way GDP is computed. The Chinese though aware that India is nowhere close in regard to its economic size, but is nevertheless, keen  repetitively reassert to ensure that it is the market leader in Asia.

India would have to cover quite a lot of ground to catch up, : this author feels that India might be a decade behind China - although currently the Chinese manufacturing has been slowing and India has just launched a Make In India campaign.  What India must do is soul search to bring investment in to its dilapidated infrastructure and similar issues.

With the Reserve Bank of India holding a Bundesbank type attitude on inflation, costs of the Indian corporate sector may come down slowly , particularly now since oil prices seems rising. The budget has seeds of inflation; fuel prices have already moved up. That makes it even more difficult for the RBI to move rates down.

India really needs to ask itself where its imperious bureaucracy is stalling projects. Investors like Warren Buffet who are sitting on tons of liquidity avoid India. That is perhaps of the oligarchic hold of the local  industry who kill entry through its stranglehold on matters. (Remember Vodafone? Look at the state of inefficiency of BSNL the major service provider and one will know why big players avoid India. ) The cronyism between large industrial houses and the the bureaucracy is best exemplified in the recent case of industrial espionage. India needs to really restructure itself  not just symbolically.

Sending up the stock markets without concomitant moves up  in the fundamentals is untenable for any economy. There is nothing to be proud of in an appreciating currency in today's world where competitive depreciation is taking place.

There is quite a bit of currency and strategic games at play in Asia too.


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Warren Buffet to Germany...

Not that US is weak, But that Germany is organized enough for Buffet to make an entry. Germany is a performing economy.
Since 2007 -2008, the Germany has performed in a direction different from the other large economies like France, Italy and Spain. Look at the major economies and their current unemployment rates.

Germany : 4.789

France: 10.3

Euro Area: 11. 5

Italy: 12.9

Spain: 23.7

Buffet also seems to accept that the gateway to Europe is Germany. 

Unemployment Spain, Italy, France and Germany.
Source: Bank of France


Without any risk lr responsibility