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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Is a Recession Imminent?

Definition of a Recession: The textbook definition of a recession is two quarters of negative GDP growth. Some examples of recessions in...

Showing posts with label qe. Show all posts
Showing posts with label qe. Show all posts

Wednesday, 4 October 2017

Emerging Parallels to the Fall of 2007 - Hallmark of a Brand New Crisis

The fall of 2017 is increasingly looking like the fall of 2007 when risky assets topped out:

Thursday, 20 October 2016

Chart of the Week - Balance Sheet of the US Federal Reserve

The chart of the week is courtesy Charles Hugh Smith and shows the current balance sheet of the FED. The current balance sheet show a total asset base exceeding 4.5 Trillion dollars thanks to a series of quantitative easing (QE). This is up from the 1.0 Trillion mark in 2008 when the FED flooded the world with cheap money via its unconventional monetary policy. Wonder how long this continues?
US FED balance sheet

Wednesday, 31 August 2016

Chart of the Week - BOJ Stock Market Casino

The chart of the week is courtesy Doug Wakefield via Safe Haven and shows that the Bank of Japan (BOJ) is a top 10 share holder in about 90% of the Nikkei 225. This after the Nikkei has been down nearly 60% since its highs in 1989. After multiple QE's that have failed to stimulate the economy and get rid of the deflationary negative interest rate scenario in Japan, this latest move by the BOJ has failure written all over it. Another down move in the Nikkei from a strengthening Yen could prove to be problematic for the BOJ going forward.

BOJ is Top 10 Shareholder in about 90% of Nikkei 225

Tuesday, 12 July 2016

Chart of the Week - Historical Inflation View

The chart of the week is courtesy MarketWatch and shows inflation levels over time. We have been in a dis-inflationary phase for over 20 years now and could soon enter a deflationary spiral as record levels of quantitative easing (QE) have failed to spark an upthrust in inflation:


Thursday, 21 April 2016

Chart of the Day - Velocity of Money

The chart of the day shows the velocity of money (data courtesy the St. Louis Fed) since 1959. It shows that the velocity of money is below levels observed in 1959. The velocity of money typically rises during periods of growth and falls during recessionary periods. So the recent plunge to new lows suggests that QE's from global central banks have really not worked and a major recession may just be lurking around the corner.
velocity of money

Tuesday, 20 January 2015

Bear Market Lessons from History

While the financial media tends to be absolutely infatuated with stocks hitting new highs every day, we would do well to pay attention to some ongoing bear markets, Charts are courtesy yahoo finance and marketwatch.com:
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1) Japanese stocks continue to languish under the effects of deflation following a well over 26 year old bear market, down over 45% from the highs set in 1989.

2) Despite some great innovation out of the U.S from the likes of Apple, Google, Facebook e.t.c the #NASDAQ continues to remain in a 15 year bear market near its highs set in 2000.

3) Despite going parabolic yet again, Chinese stocks continue to remain in a 7 year bear market down well over 50% from the highs set in 2008.
SSE Composite Index (000001.SS)
4) US bank stocks are entering a 7 year bear market despite all the #QE money and super low interest rates down over 30% from their highs set in 2008.

5) The #Euro is also in a 7 year bear market down over 25% against the dollar from it's highs set in 2008.

6) #Gold and gold ETF's continue to be in bear markets down well over 35% from their highs set in 2008.

7) The more recent casualty #oil and oil ETF's are down well over 60% from their highs set in 2008.

It is well worth noting that it is no strange coincidence that there are major bear markets in several key asset classes and despite recent bear market rallies caused by the FED's QE for ever policies the hibernating bear is all set to emerge with a vengeance.


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My Asset Allocation Strategy (Indian Market)

Cash - 40%
Bonds - 20%
Fixed deposit - 20%
Gold - 5%
Stocks - 10% ( Majority of this in dividend funds)
Other Asset Classes - 5%

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.