Wednesday, June 10, 2009


Well I'm back after a really long break from the Bullish Bear!!
Been busy with work and also catching up on some reading!! Worked on some good stuff for upcoming posts.

Not a whole lot has changed. Emerging markets have rallied on, and the US Dollar weakened considerably, only to stage a comeback of sorts since late last week.

Currencies have been volatile, trending back and forth to the good and then continuing bad news in global markets.

Rising Treasury Bond yields in the US created quite a stir, as more paper from the US Government is set to hit the market!

So what does the FED do now?
Raise short term rates and trample the 'green shoots' in a bid to support the USD?
Let the USD slide continue and face an ever rising cost of borrowing in the US T Bond Market?

GOLD sold off heavily last Friday.
The elusive $1000 mark is insight, but just out of reach. The USD was quite oversold recently, and staged a comeback just as Gold was about to take on the $1000 level.
Keep in mind, that this isn't the strongest time of the year for gold, so expect some consolidation before the next move.
Commodities also sold off after their recent run up, and precious metals weren't spared either.
I expect gold to trend upwards once we are done with this 'summer consolidation'.

August onwards, we should see the 'sugar high' effects of various government stimulus packages start to wear off, even as governments will have to continue to deficit finance their way out of this mess.
If the USD continues to stay weak at that stage, we could be in for a precious metals rally in the last quarter of 2009.

While it is perhaps too early to call for inflation, it will be interesting to see how governments react to it when it finally comes to the party (yes, money printing isn't the final solution!).
The last time we faced inflationary pressures in 2007-2008, the unemployment situation was far far better than it is today.

It's not over yet.
A 'V' shaped rally in the stock market does not mean that we are out of the woods yet!

Lets not forget that markets are still well below their bull market highs and there are many who were heavily invested in equity markets at the peak.
Some of these guys are still in really bad shape; yes even after this market rebound!

Contrary to popular belief, they were too broke and too scared to buy anything near the market bottom, and are now either selling into the market rally, or beginning to chase the market in a last ditch effort to outperform their peers.

Many Private Equity funds and Hedge Funds, are still stuck in illiquid investments that they are now selling at discounted prices.

Green shoots aside, the 'Transport ' sector is still down in the dumps.

Keep an eye on Trucking Freight rates, Rail Cargo rates, Air (Cargo and Passenger) rates and Sea Freight rates.
Aside from a recent bounce, these rates too, are far below their peak rates.
Weak consumer demand is evident, and as the consumer looks to pay off debt and save for the future instead of spending in the present, consumption figures will continue to be anaemic.

For now, its important to stay focussed on the big picture.
Look to do a portfolio clean up if you need to, and remember to maintain adequate liquidity in your investment portfolio.

The waters are still choppy and 'testing times' are set to continue.
Lastly, ignore the advice of experts who are now turning bullish, and advising you to take more risks at a time when you probably need to cut back on your ' risky ' investments!

1 comment:

Anonymous said...

whats going on with Crude? havin' some kind of mini melt-up...