ECB is it putting its act together?

Finally, we have news of ECB  in action. We see efforts to depreciate the euro by lowering interest rates and compelling an exit from the currency. That should the European industry good.
We also hear of asset expansion by ECB; bold moves from a conservative central banking institution which has to take on board 18 national interests!
However, ECB  has to be aggressive ; a few billions may not suffice ; if it hesitates, it might affect Europe and global markets. 

Sell on the fact...

Europe stocks are being rational. The risks remain. The dollar's rise has to be seen partly as a response to benign data and partly as a return to safety. What is most worrying is that IT stocks are not doing as well as they should. It will take some time to neutralize the several  trillion losses the markets have reportedly suffered in the previous days.  

Buy on the rumour, sell on the fact...

Dalal Street climbed up morning 400 points on the euphoria over diesel reforms and also in the pro-reform verdict of the people in the recent elections. Diesel price fall indicates sooner than anticipated monetary easing as prices slide to match diesel declines.  These might be a good time to sell for an in and out trader ; as these factors are already factored in.

The German Deutsche Bundesbank and the Lufthansa strikes point to an indifferent collectivism which further threatens the Euro...

New York Hope...

New York has to hold on... unless buyers outstrip sellers in Wall Street today ,  next week there may be a sell off week across. Global equities are supposed to have already lost $ 3.5 trillion; and if New York does not reverse the trend, there could be blood in the market streets next week... such a fall is not warranted. The Germans have been , usual, at loggerheads with the rest of Europe. USA has to ignore Europe and strategically place itself with Asia if growth has to move forward. The real sector is well placed to avoid  another recession.

New York stocks, Russian ruble and the week that went...

It is fashionable to think that there is a convergence of markets : so if New York catches cold, Mumbai must sneeze!!!The better than expected performance by Infosys kept optimism on a day the global fears rattled the markets. Asia sympathized with Wall Street as it turned sellers.


To fly into gold continued to be a conservative's labor!  As Europe totters, and oil slides, Russia also would weaken with its impact on all where Russians invest. The ruble cannot be defended easily in a falling market. The Russians might like a gradual fall; but the market laden with hard currency shortages might not toe the same line.




Metals fell , Europe stumbled, Fed was soft and the markets staggered. There has been a bout of pervasive pessimism.


So tonight as New York opens and Asia drifts off, the markets need to recover. The sentiment has to turn. New York has to lead in trend reversal for the sake of the coming week! There is much to be optimistic about in falling oil and employed Americans. Forget the Europeans, they have neither the men nor the machines.

Irrational fears knock at gold's doors

Irrational fears stalk the world market... investors then keep on knocking at gold's doors.

Gold is always a safe haven for families, investors and central banks. So it continues to stay in the news despite the low income streams. With the Fed minutes indicating slower action, and with a lot of pessimism on growth, investors swarm into gold. Investors are on a learning curve; it is the Japanese experience and now the European one which is keeping them flocking to gold. People are wary of possible secular stagnation. Chinese and Indian fascination for gold adds to the demand factor.

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The Chinese economy is onto a slower pitch. Housing and retail markets have been slow. Some 40 industries are reportedly affected by the construction sector ; so the multiplier is weak. The Chinese authorities seem to be loosening liquidity. the second largest economy is however quite a safe bet with foreign exchange reserves at $ 4 trillion.  So worries can only be in the immediate near term.

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India has been trying to gather the growth pace. With nearly 300 projects waiting clearances, growth is a natural priority for the government. So investment with all its multiplier should work well for the 1 billion people economy. Falling oil prices should be music to India's ears. As oil moves below $ 90, India growth story gets a push.

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Petro-producers should start worrying as extraction costs are high. The Middle East looks set for deceleration unless its investment funds are loosened. Economies like Dubai, so dependent on extraneous factors seem suddenly vulnerable. Oman appears to have difficulty in extracting its limited reserves. 

USA comes through strong...but the dollar better be weak....

Jobless claims- fell underlying the return of USA on to the economic growth scene. Less numbers of Americans sought benefits. Buoyed by high oil production in USA, oil prices have been falling.  With oil prices on the decline, industry , services and agriculture all should see lessened costs and enhanced margins. Consumer spending should increase in the months to Christmas.

European secular decline a la Japan may be a good reason for gloom; but then have we not already discounted that apprehension? As costs mount, companies would move out of Europe... unless there is a quicker restructuring(which is unlikely)  unemployment will increase there... Europeans who are averse to migration may have to themselves migrate... A technical recession in Germany the powerhouse of Europe will accelerate Europe-pessimism.

USA wants a strong but not stronger dollar. That is in line with macro growth urges-  to make imports costlier and exports earning more. Europeans had better learn that trick!

Fears of a global slow down seem to hold gold high.  If there are hints of a weaker dollar, gold might gain marginally.
 

Sentiments drive markets...Unreal economics?

IMF  and World Bank predictions drove markets down... German, China and LatAm concerns expressed by Washington's supra-nationals helped push the markets down...
In this fall, are the seeds of the rise. Consumer spending will increase as real incomes increase following drop in gasoline prices. China, India, USA and even Europeans will benefit.
The strengthening of the dollar will keep the prices of oil down for sometime.  Corporates will gain.
The problems of banking are however the main worry in the minds of Asian giants India and China. Loads of non-performing assets and recovery  worries haunt banks and regulators. If the Asians are able to smoothen those creases, Asia will pull the World recovery with USA. Cost heavy, close fenced Europe will continue to totter ... the question is not whether but when the cost heavy economies will decline and fall... If euro declines it reflects real economics...