The acceptance speech by Obama before 75000 strong supporting crowd in the stadium has been hailed as historic. It will be remembered along with the speech by another democrat and young President in 1960 which too was in a stadium. Kennedy then had given an unforgettable line 'think not what your country can do for you, think what you can do for your country'. Obama’s certain lines will also be picked up in the same way, his oratorial style matches with some of the most remembered speakers of past. What his solution to the financial crisis will be, would be the giving the taste of pudding he has in hand to offer. I have not followed closely his economic leanings and what will be impact of his proclaimed policies on India, is difficult for me just now.
The DOW’s advance on Tuesday turned downwards and it lost close to 500 points. Asia was up on Wednesday but India bucked the trend and closed lower by about 5 pc, so in a way now leads the trends. The Asian markets are down by about the same margin in most countries today. The yo-yoing of indices at least tells one fact that the bears and bulls, both have confused state of mind. The trend simply can not be visualised but if the bulls may come out winners as the interest rates are favouring them, the bear positions give chance to carry forward trades without much of cost. The down side has to be limited after steep falls as floor only can be slid to be its limit. Bulls have room for up move which has no limit. I may, out of my experience, tell you that some developments have such remarkable power to fuel the markets move up as is very rarely seen. It is that govts are hell bent to see order restore, the big groups are making calculated production cuts, the cheap money policy is in vogue, the taxes are being slashed, the raw material costs and energy costs have come down, the employees benefits are on way down, the uneconomic capacities are being scraped, the new capacity creation has slowed, the economic/financial order will be far more stable, war monger president has gone, the US will not bleed as much through deficit now, the dollar is strong and most of all India does not have to look up to any other nation for technology/organisation/finance on unequal terms any more, the high and mighty have shown their tender belly while India has shown that its backyard does not have stink and many more such things.
There may some time lag before the conditions are ripe for the climb to commence but this time gap will be short only. The increased money supply chases equities when the real interest is negative and by the way it is negative all over the world today. So, even if the profitability growth goes on leave the preparation for its welcome have to be made now. Those who have not put welcome sign on their doors in good time will see the lady prosperity(profitability) skipping their home.
Why fear the long drawn bear market, your money is not going to give positive return either in commodity, real estate or in interest bearing securities.
Some would not like such preaching when the mood is sombre. People are ready to bury the body which has only gone unconscious due to a sudden blow. What can you do, the crowds behave this way, particularly when they have crony leadership take the stage.
HariOm,
Krsna Khandelwal
BIRDINFO Stock Rx - A prescription for stock market
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