Central Banks are running short of policy tools and have reverted to direct liquidity infusion, and in a co-ordinated manner.
We seem to be entering a period of stagnation /deflation and all the monetary expansion will probably mask the data from a nominal standpoint for a few quarters - the medium term trend is painful
1. Simultaneous de-leverating of households, industrial sector and sovereigns will reduce global spending in real terms
2. Reduction in growth, in real terms, will mean painful contraction of incomes (for individuals, corporates and sovereigns) and lead to painful defaults where any of the entities are not able to pay due to increasing interest demands (rising risk profile) and reducing incomes
3. Sovereigns are introducing liquidity measures to pump the markets with cash, will have a nominal effect and delay the trickling of real impact : Indebtedness cannot be solved by a liquidity push, it can delay the invetiable. The only solution to indebtedness is deleveraging or default.
4. Either ways it will be a difficult time swinging between sub-normal growth or inflationary pressures (caused by liquidity push by central governments). Hot money in-and-out, especially EMs and even DMs is a possibility, especially on the equity and commodity sides
5. Markets entering unchartered territory where for the first time sovereigns will have the same challenge as individuals and corporates earlier, and that too on a significant scale world-wide
6. Sovereign defaults will be more frequently talked about in the coming quarters and I presume, competitive devalution will resume - which has now slowed after an initial burst in 2008-2009
7. Expecting equity incomes to be -ve, unless if trading on volatility. Do not expect EM markets, espeically India to outperform given global macroeconomics, condition of infrasturcutre (especially power sector), slowing policy - making, shutdown of privatization, high interest rate scenario and falling rupee
8. Avoid NIFTY, stay in cash. I'd prefer GOLD.
We seem to be entering a period of stagnation /deflation and all the monetary expansion will probably mask the data from a nominal standpoint for a few quarters - the medium term trend is painful
1. Simultaneous de-leverating of households, industrial sector and sovereigns will reduce global spending in real terms
2. Reduction in growth, in real terms, will mean painful contraction of incomes (for individuals, corporates and sovereigns) and lead to painful defaults where any of the entities are not able to pay due to increasing interest demands (rising risk profile) and reducing incomes
3. Sovereigns are introducing liquidity measures to pump the markets with cash, will have a nominal effect and delay the trickling of real impact : Indebtedness cannot be solved by a liquidity push, it can delay the invetiable. The only solution to indebtedness is deleveraging or default.
4. Either ways it will be a difficult time swinging between sub-normal growth or inflationary pressures (caused by liquidity push by central governments). Hot money in-and-out, especially EMs and even DMs is a possibility, especially on the equity and commodity sides
5. Markets entering unchartered territory where for the first time sovereigns will have the same challenge as individuals and corporates earlier, and that too on a significant scale world-wide
6. Sovereign defaults will be more frequently talked about in the coming quarters and I presume, competitive devalution will resume - which has now slowed after an initial burst in 2008-2009
7. Expecting equity incomes to be -ve, unless if trading on volatility. Do not expect EM markets, espeically India to outperform given global macroeconomics, condition of infrasturcutre (especially power sector), slowing policy - making, shutdown of privatization, high interest rate scenario and falling rupee
8. Avoid NIFTY, stay in cash. I'd prefer GOLD.
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