Humor: World in Pictures

Buddhists are upset over this cartoon depiction of the "Buddha":

The US is on top of the Economic crisis:

The new administration is clarifying the economic situation...here is the illustration:

President Obama has a new symbol for the US Economy:

Unemployment in the US is rising...and rising:

New cities are cropping up for the Unemployed...despondent and decrepit:

Here is the new curve for the up coming Economy Recovery:

Is this a Bear market rally?...yes, if you look at the past as a guide:

Audience showed up...where is the act?

From the Indian Mooncraft Chandrayaan 1:  in orbit around the moon looking at the Earth...India in the middle...how appropriate:

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Indian Markets: Casino is Open...Beware

The Indian and Global equity markets are flying ....up, up and away; Equity markets are supposed to anticipate economic performance which translates into earnings.

Below is a potpourri of articles illuminating the state of the global economy:

Corporate Default Rates...

Less Awful Economy= Good Markets...

Mark to Make Believe...

FASB and Zombie Banks...

Generation of Denial..

Unemployment Statistics...

I take the view of the Appropriation Bill from Congress which says:

Be Prepared for extraordinary crcumstances

While this rally seems to have firm buying I cannot see the light at the end of the tunnel..those that do, please make sure it is not an on-coming train before you proceed.

The charts are no longer friendly...

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India Economy: More News..Sigh

Global Crisis battering Economies

The World Bank said its latest projections show the global economy shrinking by 1.7 per cent in 2009. "This would be the first decline in world output since World War II," the bank said.

World Bank: Slower Growth in India

As the global economy deteriorates sharply, the World Bank has projected a slower 4 per cent growth for India in 2009

India and China Bond Markets:  almost 10 to1 size difference.

India Bond Market size  :  USD 450 billion
China Bond Market size:  USD 2.18 trillion

 

Humor:

Wall Street- Washington Nexus:

 

USA: Rising Unemployment

 

Pakistan PM Gilani:  from Spoof and Parody

"We want to be everybody's friend and we want to be India's friend and with friends like us why does India need enemies"

Cramer calls a bottom (again) --what a clown...this is CNBC

- January 10, 2008 - Financials have hit rock bottom.
- August 12, 2008 - The bear market is dead.
- October 15, 2008 - This is the beginning of the end of the crisis.

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India Economy: Rough Ride Ahead

A potpourri of news articles...No Good news forthcoming.

OECD Country GDP (4.3%) in 2009

Economic activity is expected to plummet by an average 4.3 percent in the OECD area in 2009 while by the end of 2010 unemployment rates in many countries will reach double figures for the first time since the early 1990s, according to the OECD’s Economic Outlook Interim Report.

In the large emerging economies activity is slowing as access to international credit dries up, commodity prices fall and export demand weakens. Brazil’s GDP is expected to decline by 0.3 percent in 2009 while Russia’s is projected to fall 5.6 percent. Growth in India will ease back to 4.3 percent this year and in China to 6.3 percent.

India growth 5% in 2009: ADB

"Expansionary fiscal policies could impair the confidence of investors unless clear signals are given that the present large deficits are truly temporary," he said.

ADB urged the Indian government to review tax policy, the quality of public spending and the effectiveness of public programmes to ensure that it has room for the infrastructure and social sector spending that is necessary for achieving rapid, longer-term inclusive growth.

Indian Banks Strong: RBI

The high-level committee on financial sector assessment headed by RBI deputy governor Rakesh Mohan also forecast economic growth of 8% in the medium term.

"The capital-to-risk-weighted assets (CRAR) would reduce from 13% to 10.9% for a 244-basis point shock," it said, adding that only in case of 20 banks, which account for 36% of total assets, would the CRAR slip below the regulatory 9%.

Why are Indian Policy makers seeing rosy futures compared to their global counter-parts:  No one believes the 8% growth forecast...and if 36% of the banking system was under-capitalized in a further downturn I would be worried and not talking about stability.

But hey, that's me...

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India Markets: Technical Explanation

I have not seen any evidence yet that the economy is bottoming....anywhere...and the theory of De-Coupling is now firmly placed in the trash bin.

So what are we witnessing?

A technical, selling exhaustion rally...which will be followed by increasing volatility and then the inevitable thud.  The rally is past...the volatility is upon us...the thud is coming.

Readings:

Seven Uncomfortable Predictions

Is China Today the U.S. of 1929?

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Global Markets: Lies, and Damn Lies

The Internation Space Station with the limb of Earth as Backdrop. Breath-taking.  (Second brightest object in the Night-time sky after Moon).
(click image to enlarge)

Market Comment:  I continue to own April Puts; strikes at Nifty 3000, 2800, 2600 and 2500....this rally is complete nonsense....but, I am not naked short because when there is malfeasance by official bodies, better to limit your risks....SO I OWN PUTS.

I am tired of being negative...but the continued disaster known as "official policy response" to the economic meltdown is reinforcing the negativity.

The G-20 is coming....yawn....a boondogle and a security risk for Officials..nothing more.

Citi and Bank of America etc...talked of higher profits this year..so far...not so in March 2009...turns out Jan and Feb 2009 were better because of special payments by AIG under CDS contracts...one time payments at tax payer expense...a big lie...traders and investors went for it.  US Banks Bait and Switch

There is the joke called the US Presidency; enough said. Krugman says the plans to solve the financial system crisis are so bad "he is filled with Despair".

 Articles to Read and Ponder while you own Puts, sit back and relax:

India Funds witness Outflows

The Quiet Coup

US:  Plans perfect, no back-up Needed...Hahahahahah

World's scariest Emerging Market:  USA

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Humour...sometimes more accurate than editorials

Market Comment:..Expect continued sideways action...volatility to increase as the week progresses....increased risk of break to the downside by end of week.

Last Tuesday, as President Obama got off the helicopter in front of the White House, he was carrying a baby piglet under each arm.

The squared away Marine guard snaps to attention, Salutes and says:

"Nice pigs, sir."

The President replies:

"These are not pigs...these are authentic Arkansas Razorback Hogs. I got one for Secretary of State Hillary Clinton and I got one for Speaker of The House Nancy Pelosi."

The squared away Marine again snaps to attention, Salutes and says,

"Excellent trade, sir."

Congress/Obama shocked at AIG bonuses:  A distraction while they loot

  

Obama is concerned about the bonuses...the bailout is 1000 times bigger..no problems there:

In the US of A, you no longer need the mask and gun; bankruptcy, fraud and incompetence will do:

According to Congress, AIG now stands for:  Arrogance, Incompetence and Greed...what are the kids learning:

Finally a graphic about the guy who would not accept anything until Citibank was profitable, but pocketed $10.8 million anyway:

What does arrogance, incompetence and greed lead to:  well an Economic Tsunami which is only now hitting American Shores and will get bigger as 2009 progresses:

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India: Neighborhood Policy

Despite India's success in Economic development there has been little impact on our neighbors. India's budget for military expenditure, Education, Infrastructure development and lobbying for political influence have all increased manifold, yet our neighbors are unmoved in their behavior.

Pakistan is an unmitigated disaster by all measures; yet it continues to behave as a regional power when the reality is that it cannot even control its own territory. Nepal is a disaster, its main income source is Tourism and with its constant violent clashes this industry has gone for a six;yet it continues to irk and irritate the giant at its border.  Bangladesh is a disaster and yet it continues to irritate India with its illegal migrations and providing sanctuary to terrorists.  All of these countries would benefit enormously by creating friendship with India on the basis of economic development and security...yet they defy all common sense by continuing militant agitation which is costing them generation after lost generation.

These neighbors of India need to think differently; a new paradigm is required.  The blueprint these countries should use is the relationship between Canada and the United States.  Despite a border which stretches over 5500 kilometers (today, completely undefended)...a population difference of 10 to 1..economy size which is 10 to 1...these two are the largest trading partners in the world.   And a Canadian's definition of himself is:  I am not American..that is enough.   And a proportion of Americans still believe Canadians live in Igloos...

And then there is the country to our North, China. What is the basis of the friendship between China and Pakistan? Clearly, the friendship has not led Pakistan along a path to development let alone enlightenment...one can understand Pakistan wanting to make friends with a giant neighbor but why would China want to be friends with a country which can only beg and provide little else...in the last three months alone we have seen the President of Pakistan go begging for money to the IMF, Saudi Arabia, USA and China...

Pakistan has only one potential friend in the world...and that is India because we are people of the same soil...everyone else will focus on the opportunity to exploit a stupid people with visions of grandeur.  In our case, a emotional bond exists...

It is now clear the Taliban, moderate or extremists, will gain more say in Pakistan. This is a reality which all nations, including India have taken as given. What should India's response be to this development?

Let us first look at the ambient environment today..a sea change has occurred..

1. While Kashmir continues to be a sore point between India and Pakistan, it has diminished substantially because of the success of elections and climb down of the Hurriyat.
2. Furthermore, the developed world economies are in contraction..the effect is being felt in all export-oriented economies...notably China and most of Asia. India is less effected because export forms a smaller part of GDP...but our growth is fueled by capital inflows which depends on world wide prosperity and subsequent search for higher yielding investments.

So India could use a carrot and stick approach towards China..while China has been using a stick/stick approach...

The Stick:

There are substantial Muslim majority regions in Eastern China which are clamoring for rights...It seems to me that India should find ways to encourage Al Qaeda and Taliban to focus away from India, as a battle already won, and focus on China as a battleground to be conquered.

After all, China's dalliance with Pakistan has cost India dearly..it is time that the monster that China has coddled should rise and bite it in the arse.

The Carrot:

Increased access to the fastest growing consumer market in the world and investment opportunities for that huge hoard of foreign currency reserves which need some diversification away from the US dollar Treasuries.

The carrot is a win-win for all in the region...the stick is an India win- China lose proposition.  China may be wise enough to choose the Carrot.

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India Cricket: IPL out of India (Part 2)

IPL Shift: Congress says no Politics Involved

The decision was taken after state governments of Maharashtra, Andhra Pradesh, Delhi and Rajasthan told the organisers that it would be difficult to provide security due to the General elections.

One slight problem with this statement:  all of the above mentioned states are ruled by the Congress party...Gujarat, Madhya Pradesh, Karnataka, Tamil Nadu, Bengal, Himachal Pradesh have no problems hosting the IPL....but they are NOT ruled by Congress.

This is politics and it is rotten..let us hope the Indian polity which is unmoved by performance will be moved by losing its "religion"..and boot these clowns out of office decisively.

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India Cricket: IPL out of India

In a rude but deserved slap to the Congress-led UPA government, the BCCI today announced that the IPL tournament will be held in either South Africa or England..(South Africa is my bet).  The Congress controlled states Maharashtra and Andra Pradesh refused to give permission because of security concerns...laudable but laughable.

This Congress-led UPA has managed to bring this country to its knees; the richest cricket tournament in history cannot be held in India because of security concerns...this is unimaginable...and the people of India will deliver their verdict at the polls in April and May.  In a country where cricket is religion, the Congress-led UPA is in for carnage at the polls...

In 2010 India is the host country for the Commonwealth Games....this is an event where the number of athletes will be approximately 5000 compared to 200 for the IPL....would you consent to come to India given the debacle which we have just witnessed.

Expect a disaster for the Commonwealth Games of 2010...it would not surprise me if that is also moved out of India as participating countries start voicing their concerns, starting NOW.

My personal view is that the Congress and its boys were holding out for a bigger share of the revenues from IPL...Sharad Pawar decided to show everybody who is BOSS...and he gets my vote.

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India Economy: Policy falling behind developments

Two years ago, inflation was  set to roar as a result of the congress-led UPA administration's populist, profligate budgets.  Yet the RBI stood around benignly watching and mimicking the words of the spendthrift FM.

The result was out of control inflation and resultant poicy action to increase rates to rein in price rises...now, the RBI is again falling behind the curve.

It is incumbent on policy makers to anticipate economic developments and make pro-active policy moves.  We are now heading to real interest rates of 10+% and yet RBI is sitting around waiting for ...who knows.

Clearly, deflation is here and will be around for some time..I expect inflation in India to head for -2.5% in the next few months...under these circumstances borrowing at 8 or 10% is a an impossible proposition for business...

We need a sharp reduction in policy rates followed by sharp reductions in PLR and loans for housing and cars...without these policy moves expect further deceleration of GDP to the 3%+ level...job losses and bankruptcies will fill headlines. 

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India: Markets Sideways, Economy downwards

Well, you have seen the market action of the past couple of days...up through 2800 Nifty and then back down...when enough money is poured into the markets the sellers will come and clean up...IT WILL NOT BE PRETTY.  I continue to be long Puts on Nifty at 2500 and 2600 strike.

I know a lot of people want to believe that there will be a recovery sometime this year...you must be listening to talking heads and politicians.  If you listen to these people and invest your money then you deserve the shellacking your portfolio suffers.

I found the following useful:  India one of the Riskiest

CLSA said tax revenues were crashing, expenditure exploding as the government in a bid to win the elections had given “full bridle to its populist urges”.

The United States has pushed the "RED Emergency Button" and decided to print currency out of thin air to buy its own Bonds...the dollar plummetted...and there is growing perception now that:  Dollar dead, Fed credibility shot

Be very careful with your investment dollars...and now for the funniest line of the day: AIG chief urges return of bonuses

He told legislators he had asked staff at AIG Financial Products – the arm that brought AIG to the brink of collapse – to “do the right thing”

If the staff knew what the right thing was then AIG would not be in this mess...LOL.

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India: Audit Standards under Review

Remember the following comments in my article ofJanuary 5, 2009:  Whistle Blowers and Barking Dogs

Which brings me to some anecdotal evidence...in 5 star hotel restaurants around Delhi/Gurgaon there have been many large teams sitting down to dinner together...many foreigners, some quite young. As I observed some of these dinners, it was clear that the foreigners were not the typical investment banker/private equity types..some of them looked geekish. It turns out that these teams are not scouting new investments, but have been sent to audit the value of their current investments...a result of the Raju debacle.

Now we have the following story, two months later:

International Auditors to check Indian Auditors

MUMBAI: Pricewaterhousecoopers (PwC) plans to bring in partners from its international to do an independent audit of its clients in besides what is being done by its Indian partners.

Expect more accounting irregularities to be uncovered...will they be exposed or hushed up?...well it is election season...and the UPA is desperate...it will depend on the state where irregularities are uncovered...

Markets:  Expect sideways movement to continue...2750-2850 Nifty range...

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India Markets: Exit, Let's watch the sideways action

I have taken profit on my calls...left sell orders on breach of 2800 Nifty and was exercised on the 2800 and 3000 calls..you will recall these positions were put on last Monday at Nifty 2550.  Something to smile about.

At the same time, I have added to the March and April 2500 put position and bought some 2600 April puts...the puts were unbelievably cheap, you would think we were in the middle of a bull market...

While I expect market action to be sideways for a brief time, the next downleg is now almost visible...Watch Out Below.

The Best Line to describe Wall Street:

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India Politics: Singhvi, an intellectual minnow

The Times of India has published an article by Congress spokesperson Singhvi...

Only UPA can control Terror

First, I have to say that it is intellectual minnows that use the exclusive "ONLY us" when framing a debate..enough said about Singhvi...but what does the Congress led UPA have to say in this article:

The NDA's interactions with Pakistan were marked by zig-zags and threatening postures without extracting any concession

Congress should remember that BJP's on-going focus on Pakistan's involvement in terrorism had the US administration ready to brand Pakistan as a Rogue State in 2001.  Furthermore, the BJP changed the relationship with US from adverserial to friendly by turning its back on 50 years of Congress miss-rule and vowing to be on the right side of history. ..however, 9/11 happened and there were new realities since Afghanistan became a bigger priority.

The bus yatra was followed by Kargil and the failed Agra talks were followed by the Parliament attack. Apart from grandstanding on POTA, no concrete actions were taken nor any results achieved.

Intellectual minnows usually confuse correlation with causation...

By contrast, the Congress extracted an unprecedented admission from Pakistan about fomenting terrorism on its soil. Two seminal acts of Parliament creating a federal anti-terror agency and amending substantive law have been passed in record time.

Advani talked about the former from 2001 but could not even introduce a Bill

Strange; after thumbing their noses at this Congress-led UPA administration Pakistan was forced to prostrate itself by the United States...to take credit is politics not competence.  Furthermore, to take credit for enacting a federal anti-terror agency is stretching belief; Advani created this agency but it was opposed tooth and nail by the Congress and its allies...even after four years in power they did not move on this..but the Mumbai terror attacks forced two actions:

1. Congress-led UPA was forced to reverse four years of opposition and pass a stronger anti-terror law..remember their first action on ganing power was to repeal the anti-terror law enacted by the BJP
   
2. Table the BJP's federal investigative agency, focused on terrorism..of course, this could only be enacted with BJP support...Had the Congress and its allies supported the BJP's action six years ago, the agency would have been active and may have prevented many terrorists attacks in the last five years.
   

The UPA's philosophy....a humane and inclusive approach to governance which does not divide society or communities to reap cheap political benefits.

Sounds good...I would support such a philosophy...except the intellectual minnow's conclusion is:

The BJP approach, on the contrary, may well lead to the creation of Frankensteinian monsters impossible to control.

I am supposed to take this Congress spokesman seriously...this gentleman is a celebrated lawyer...such an argument would force the judge to throw him out of the court room.

The Congress-led UPA has no accomplishments to speak of after five years in power: the economy, security, future are all in disarray because of this government...so, fear mongering is their new election plank.  How sad.

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Citibank, Madness continues...Sickening

Citi awards CEO $10.8 million

Pandit said in February he will accept a $1 annual salary and no incentive pay until the bank is profitable. His nearly $11 million of 2008 compensation included $7.73 million of sign-on and retention awards last January, the month after he took over.

Is there a contradiction in this paragraph...let us look at Citi since Pandit arrived on the scene:
Citi buys Pandit's Old Lane hedge Fund..it goes bust and investment gone
Pandit takes over Alternative Investments...which goes bust
Pandit takes over the whole shebang at Citi..stock price declines 90%, government provides $50 billion plus of equity and underwrites over $300 billion of "toxic" assets

Citi's Board awards CEO $10.8 million

Any wonder why the entire financial edifice in the United States faces collapse...it is rotten at the core...

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India Markets: Rally Coming to an end?

(Click on pictures for clearer Image)
As the chart shows, our view has panned out...the Nifty has ticked into the upper part of the blue shaded region...expect this rally to start fading now...my upside target is 2865....

However, not enough money has entered the market for sellers to pull the plug...there is a lot of selling waiting in the wings...expect sideways movement for sometime to sucker more money into the equity markets.

The next down leg in this market will rival or surpass the October carnage...hard to believe that people can still be shocked...but that is why this downturn in markets is not over.

Below is a longer term chart of Nifty:

It sure looks like we are out on a limb, with support at 2000...expect the support to be tested as the first quarter results season gets underway further undermined by lower prints of GDP.

Some Humor is needed:

President Obama on the AIG bonus theft:  " I am shocked, shocked..."...give it a Rest.

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Madness at AIG..and Citi and..

Why do you need to pay retention bonuses when the financial market is melting down, the economy is collapsing and jobs are disappearing faster than the Brazilian Rain forest...so we get the following:

AIG to pay $1 billion in Retention Bonuses

AIG, whose fourth-quarter loss was the worst in corporate history, earmarked $1 billion in retention pay for about 4,600 of the company’s 116,000 employees so they won’t leave the crippled insurer.

Liddy has vowed AIG will repay “every penny” to the US for its bailout package by selling subsidiaries, and said the retention pay for talented people helps taxpayers by making the units attractive to buyers

Where would these "talented" or is it "tainted" individuals go...there are no sucker financial institutions on Mars...how would you like AIG experience on your resume and you left because they wouldn't pay enough for your services...Insanity.

Every home-owner or car owner who has been foreclosed or re-possessed would like the same deal as AIG and would promise "to repay every penny"...Too BIG TOO FAIL" indeed

The surprise is these people haven't been strung up through a middle-class revolt....as yet.

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India Economy: Sub 4% Growth, Any takers?

The lame response by the Congress-led UPA administration to the global financial crisis has now sealed a downward spiral in India's growth prospects.

Economic Prospects

The Indian economy has suffered a rather extreme external shock with a negative impact that is likely to be felt for months.

According to this model, which takes into account the external shock by calibrating it on the basis of earlier shocks suffered by the economy, GDP growth in 2009-10 will be about 4%. The first half (April to September) will achieve only 3.8% growth with a weak recovery starting in the second half and raising the annual growth to above 4%.

GDP growth 4%

Barclays Capital economist Sailesh K. Jha doesn’t think so. He has revised his India GDP (gross domestic product) forecast for fiscal 2010 from 5.2% to 4%.

RBI may allow the REER (real effective exchange rate) to depreciate further in order to limit downside risks to growth” and this could lead the rupee to fall to Rs56 to the dollar within the next three months.

...the current downturn is likely to be worse than the ones in the 1990s and in the fact that the lower dependence of rural India on agriculture could actually be a weakness during a downturn.

 I expect this technical rally to continue...2800+ target...but the seeds of the downleg are being sown...I continue to buy March and April 2500 puts on Nifty but have not taken profit on my 2800 and 3000 calls as yet.

There is still a perception that the downtrend can be halted or atleast ameliorated...this is not to be...India missed the boat with its weak response to the crisis...the external shock is cascading through the economy... be prepared to exit the markets...

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India Markets: Idiotic Analysis to the Fore...

Bottom Forming: Stupid Analysis

In simple terms, these low P/E ratio figures show that an investor who was willing to pay Rs 22-25 for every rupee an individual share earned a year ago, is willing to pay only Rs 8.71-10.15 for the same rupee-earning now

I want to yell at this idiotic analysis...IT IS ABOUT THE E YOU FOOL...THE E...earnings are dropping, they are not constant....As long as analysts like these are calling a bottom, the bottom is nowhere in sight...

I think this market is going to have more problems as we confront the real possibility that we will get some really poor earnings for the first and second quarters. The economy is simply weak, and that weakness is hitting more and more companies. From exporting companies to the big international firms, a global slowdown is hitting almost everyone.  We could see a real bear market rally lure investors back in, just to crush their hopes this summer.

And Protectionism is rearing its ugly head,  From Bloomberg:

“American exports have slumped at a 44% annual pace in the most recent six months of data, with imports shrinking 51%, probably the most since the Great Depression, according to Morgan Stanley analysts. The figures may add to pressure on the Obama administration to rework international agreements and include protections for US workers and the environment.”The US steel industry is planning to bring anti-dumping charges against foreign steel. India just raised steel tariffs. It seems like every day I read that someone somewhere is calling for their particular industry to be protected, bailed out, or subsidized. And it is not just the US. It is happening all over the world.

Enjoy this rally while it lasts...the G-20 is happening and will do nothings..hopefully.  Prepare for the next down leg and have full confidence in our politicians...to do the worst thing possible.

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