Ahead of the Curve provides you with analysis and insight into today's global financial markets. The latest news and views from global stock, bond, commodity and FOREX markets are discussed. Rajveer Rawlin received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher having followed capital markets in the US and India since 1993. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.

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Tuesday, 16 December 2014

The dominoes keep falling one after another

Lets take a look at a few charts courtesy yahoo finance and market watch.com. First we started with the well over 95% crash in the Baltic dry index (#bdi).
Hottest Deals On Refurbished Apple Products | JemJem DMS Baltic Index I (DBIAX)
Then we had a over 40% plunge in #gold and #silver prices as symbolized by the respective ETF's:

share prices

This was matched by over a 40% plunge in base metals:

Followed by the dramatic over 50% plunge in #oil:
Symantec Corp.

This has translated into a rout in the junk bond market:
SPDR Barclays High Yield Bond ETF (JNK)
Which will most certainly nail banks which have exposure to this toxic stuff:
KBW Bank Index (^BKX)

No surprise then at the flight to quality bid emerging in US treasuries and the #dollar:
Treasury Yield 30 Years (^TYX)
PowerShares DB US Dollar Bullish ETF (UUP)

And carry trade liquidation should start any moment with a bid for the Japanese #Yen:

All in all we have sown the seeds for the great depression of the 21 st century and the U.S Fed and its fellow central banks can do absolutely nothing about it.

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My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.