Thursday, May 28, 2015

Janet Yellen will not raise rates this year

The US economy has been decelerating over the last six months. Given this weakness and the backup in yields, I doubt if the Fed will increase rates this year. Rates will essentially stay where they are for the whole year. Furthermore, I would not be surprised if, at some point, they initiate another asset purchase program or QE4.

Tuesday, May 26, 2015

Indian stock market could drop 30 percent

In general, we had a big move to essentially 30,000 and now we can correct about 30% from the highs. Some stocks have already corrected quite a lot. So, I would not be surprised to see the Sensex dropping to 24,000 levels.

Thursday, May 21, 2015

Britain a degenerated country now

You just had the news on Cameron. You look at Cameron. What interest is he to the people of the world? Britain is no longer an empire – it’s a degenerated country….Britain is a great country but economically it’s completely meaningless.

Wednesday, May 20, 2015

Good credit vs Bad Credit

The worst credit is what the U.S. has, which is consumer credit. People borrow to buy a car or a washing machine. That does not generate income and becomes burdensome to the household.

If you look at Korea and Japan in the 1950's to 1970's, credit was used for capital spending, infrastructure, plants, education, research and development. That credit generates cash flow, which can repay the debt.

Some people argue that China has overbuilt roads, tunnels, bridges and trains. But I don’t see it that way. In the U.S. during the 19th century, the country constructed lots of canals and railroads. All the canal companies, including the Erie Canal, went bankrupt. About 95% of the railroads had to be refinanced or went bankrupt. But the network facilitated the country’s trade and commerce significantly. So China is doing the right thing.

Monday, May 18, 2015

Greece issue a political one

If Greece leaves, the North Atlantic Treaty Organization [NATO] countries led by America are very afraid that Russia will establish closer relationships [in the Mediterranean]. This is a political issue overlooked by many people. 

Thursday, May 14, 2015

Why Indian stocks are correcting downwards now

I think there was a lot of hope with the election of Narendra Modi that we would essentially have wide ranging reforms. So the stock market rallied very strongly. Now, we have a kind of an awakening that reforms will take a lot of time and many will not be implemented. Some reforms will be accompanied by new regulations. So I think that investors are sobering up a little bit.

Wednesday, May 13, 2015

Vietnam stocks could be a profitable buy

If we look at what happened in China, the economy has been weakening and some of the leading indicators are actually very weak. But still the stocks have rallied over 100 per cent. In my view, a similar rally can happen elsewhere, say not by 100%, but still the move could be sharp. I think Vietnam would be a candidate; the Vietnamese stock market has been a horrible performer since 2006 but the economy has been doing reasonably well. While there is potential in Vietnam, it may not be realised this year and may take a year or two. If one buys Vietnamese shares around the current levels, one can expect a significant gain. 

Monday, May 11, 2015

EU powers wants Greece to stay in the EU

NATO (North Atlantic Treaty Organization) led by the US is very concerned that if Greece left the European Union (EU), it will be courted by China or Russia or by a joint effort of a foreign power. I don’t think it is much of an economic issue as it is a political issue. I think the bureaucrats in Brussels and the politicians that are very close to the US will see to it that Greece stays united with the EU.

Tuesday, May 5, 2015

Asian markets have outperformed USA since last year

When you look at the market since November of last year to now. The market is up 2 percent. It hasn't done much, and a lot of stocks are breaking down. I

Other markets, European and some of Asian markets have outperformed the US. From the lows in China from June-July 2014 up to today the market is up 80 percent. So I'm focusing globally on stocks, This year Japan is up 15 percent, China is up 30 percent, Hong Kong this year 20 percent. So many markets have out performed the US massively over the last six months.

Monday, May 4, 2015

Marc Faber still likes gold miners

I don't trust governments and I don't trust Banks. So I want to own some equities, some properties, some precious metals. And when we talk about stocks the only group that stands out as great value around the world are gold mining shares. 

This year the GDX etf is up 12 percent, Neumont mining is up 37 percent, Barrick is up 13 percent. When we talk about this year its not so bad. But I don't know if Gold prices will go up right from here. If I look at the ignorance of Central bankers and their recklessness from the US to ECB to Japan to the Bank of England, I want to own some precious metals.