GLOBAL BANKING - NO RECOVERY YET.

The ever articulate David Rosenberg has continuously maintained that the Great Recession of 2008, was no garden variety recession.

 According to him a combination of deleveraging, demographics and deflation  - the result of a post credit bubble collapse has meant that despite record stimulus packages and accounting rule changes and Central Bank Balance Sheet expansion; we are still a long way from an end to the crisis.

The Charts below clearly demonstrate how the stock prices of large multinational banks have fared during the post bubble bust scenario. 


As worries of the debt crisis in Europe continue unabated and market watchers are eagerly hoping for a QE3 to boost global equities; it's quite clear from the stock prices below that the crisis is far from over.

Canadian Banks dominate World's 10 Strongest Banks

Canadians Dominate World's 10 Strongest Banks

This is a Bloomberg link that makes for an interesting read.

For readers in Asia, we tend to be more familiar with the 'Too Big To Fail' American and European Banks. These include the likes of JP Morgan, Deutsche Bank, Bank of America etc.

However, prudent risk management, conservative lending policies and a strict regulatory policy have enabled Canadian Banks to grow even as Banks elsewhere struggled post 2008.



"CIBC (CM) was No. 3 in Bloomberg Markets’ second annual ranking of the world’s strongest banks, followed by three of its Canadian rivals: Toronto-Dominion Bank (TD) (No. 4), National Bank of Canada (NA) (No. 5) and Royal Bank of Canada (No. 6), the country’s largest lender. Bank of Nova Scotia ranked 18th, and Bank of Montreal was 22nd. "


The Canadian Dollar (CAD) too has been a currency that has outperformed over the last decade.
A stable Banking System and global investors searching for higher yielding currencies have contributed to the outperformance in the CAD.

STUDENT LOAN DEBT

Here’s what we do know about student loan debt: it’s roughly $1 trillion in size, greater than either auto or credit-card debt and second only to mortgage debt in the U.S.

Source: http://www.cnbc.com/id/47171658

Here are a few more links:

http://online.wsj.com/article/SB10001424052702303978104577364120264435092.html

http://www.reuters.com/article/2012/04/26/us-usa-colleges-debt-idUSBRE83O1JL20120426

http://www.bankruptcylawnetwork.com/is-student-loan-debt-the-next-debt-crisis-well-duh/

http://www.bloomberg.com/news/2012-04-26/how-college-students-can-work-off-their-1-trillion-debt.html

Well it's not getting a lot of coverage in the International Business Media (thanks to the Eurozone Debt Crisis perhaps), but  even CNBC has set up a page for it now.

http://www.cnbc.com/id/40682477/

Watch this space. A weak US job market  ( especially unemployed/underemployed graduates) will only add to the woes of US Student Loan Debt - Lenders!

INDIAN ECONOMY AND INDIAN EQUITIES - STORMY WEATHER UP AHEAD

The Bullish Bear Blog has always been a long term bull as far as the Indian Economy and Equity Markets are concerned.

However, the ongoing policy paralysis over the last couple of years, further compounded by the scams and corruption issues have started to make even ardent bulls like myself a bit nervous and uncertain of India's long term outlook.

Sectors  that need a quick resolution to underlying issues include

1. Power Sector -  Coal Linkage issues have left many newly built/under construction power plants stranded. Troubles with increased royalty on imported indonesian coal has resulted in UMPP plants like the Tata Power plant at Mundra operating well below full capacity.

2. Fossil Fuels  - 

Oil and Gas - Pipeline tarrif pricing, Gas price policies, Deregulation of prices of retail fuels such as Petrol, Diesel, Kerosene, and LPG

Coal Sector - Disputes over coal block allocations, pricing of coal and arm twisting of the Coal behemoth Coal India - to sign Fuel Supply Agreements with power producers has added to the ongoing chaos in the sector.

In the long run, markets will have to move towards a market oriented pricing scheme, as the current system of subsidising fuels and end user prices is neither sustainable or viable.

3. Fertilizer Policy - Lack of proper implementation of policies has resulted in soil imbalances as farmers step up Urea usage as a substitute for more expensive DAP (Phosphate based fertilizers)

3. Telecom Sector- 2G spectrum scam and now pricey 2G auction base prices have left both investors and operators uncertain about fresh investment in the sector.

In light of the above issues, I think Akash Prakash's article in the Business Standard Newspaper Mumbai - 27-04-2012 is an excellent read, and perfectly sums up the current predicament of the every prospective and invested Indian Equity Investor.

MUTUAL FUNDS IN INDIA - AUM -City wise contribution

Here is a good article on the Assets under Management (AUM) by Mutual Funds in India, giving a city-wise contribution. ( BUSINESS STANDARD NEWSPAPER, MUMBAI - 19/04/2012)

Clearly, there is a lot of growth potential  in this underpenetrated market.
So far, just Mumbai and New Delhi make significant contributions to the Assets under Management, with Mumbai contributing the major share.

Watch this space!

INDIA : DIRECT & INDIRECT TAXES

Here's an interesting article from the Economic Times (investor's Guide) from Monday 19 March 2012.

An interesting analysis of Direct and Indirect Taxes over the years.

INDIAN GDP ESTIMATES

Indian GDP growth estimates are moderating.

9% growth rates may not be realistic anymore, but  GDP growth rates in India are still far above those in the developed world.

SOVEREIGN WEALTH FUNDS AUM 31ST December 2011

VIX SLIDES AS MARKETS GET COMPLACENT!

As the rally in equity markets continues, let us not forget that we still face headwinds in 2012.

Troubles in the Eurozone, record high oil prices and a possible slowdown in China.......are some of the lingering concerns.

CAVEAT EMPTOR!

GOLD -Volatile times

Gold prices continue to trade rather erratically, and over the past week have corrected below the $ 1700 level, before pulling back slightly.

I continue to be a long term gold bull, and ongoing actions of the world's central banks will continue to support higher gold prices over the longer term.

Here is the Gold Angel image from Jim Sinclair's  - JSMINESET.COM

At this stage of Gold's ''bull market'', patience is vital and a steady buy on declines policy is advisable.
I would advise investors to avoid short term trading in this manic market..