Positive Infrastructure Development Pointers

It seems as if Infrastructure development is happening. Going by the way
Metals, Real Estate Indices are going up. It may mean that there are major Governmental Projects are underway in India, like Airports, Highways.

Take a look at Source: Economic Times
"Indian markets were holding on to early morning gains taking support from the positive global cues. Traders were actively seen taking positions in stocks from second rung space.
“Though market closed very positive on last friday and looking better in daily charts, but still the weekly charts are not showing required strength. The friday's move could be a short covering and we still need to remain cautious.
First, as no breakout has happened so far and we are still in tight range.
Second, we need to be very alert about any false breakout in any direction, so watch volumes and breakout on closing basis and not intraday,” said, DD Sharma, senior vice president - Research, Anand Rathi.
At 12:15 pm, Bombay Stock Exchange’s Sensex was at 15833.88, up 144.76 points or 0.92 per cent. The index touched an intra-day high of 15879.75 and low of 15793.27
Amongst the sectoral indices, BSE Metal Index jumped 2.27 per cent, BSE Realty Index gained 2.26 per cent "

My analysis is that if the Metal / Cement Index is positively skewed, that
means there are major development projects that the market has gotten cues of.

But there's a negative side also -
As global economy moves up, Crude Oil prices also move up.
Global Markets are full of Catch 22 situations.
Financial Analyst Debajyoti Dutta Roy thinks successful investors understand the Catch 22 / Contradictory Situations so that they make profit in one sector, withdrawing money from the other at the same time.

Work Culture and Making Money - my point of view

Well, here's a sequel to my earlier posting.

I was pointing out how the Europeans, despite their lesser number of hours spent at work...make big money.

Contrast this with the U.S., and alarmingly in some developing countries like India, China & Brazil. People seem to have lost their minds in pursuit of money. Will it really benefit them ???

Look at the stock market indices and DECIDE FOR YOURSELVES...folks.

The blistering pace (bull market) seems to be "short runs" ....we need some serious introspection.

We are all getting unhealthy..in body & spirit. My neighbourhood friend who started from scratch and has made a load of money is totally disullusioned has now given in to Lord Krishna.....
......but currently I AM FIGHTING A WAR & NEED LORD KRISHNA'S ADVICE as per Bhagavad Gita... ;-)
Another friend is totally puzzled somewhere in the U.S. of A. with a startup company that earned her a couple of million $ ..... but she wants to give it all and start afresh at the Aurobindo Ashram.

Didn't Lord Buddha say Himself...that you should all follow a MIDDLE WAY ?

Anyway, I guess the only relatively healthy ones left are the Europeans and a few Latin countries.

Believe me...this senseless pursuit of money gives you an adrenaline rush......and then you want more & more & more ....... you take loans & more loans .....where do we end up ? The money will all go down the drain....

THIS APPLIES TO COUNTRIES TOO ....... THEY ARE SO INTO DEBT THAT STOCK MARKETS HAVE A SERIOUS RISK THEY WILL COLLAPSE.

European Union - NEXT ECONOMIC SUPERPOWER BLOC?

That's what seems to be happening......

Here's the quantitative analysis:

• Check out the $ versus Euro graph. It's again this phenomenon of "mass psychology". The Euro was gaining slowly but steadily. Now that the world's greatest investor Warren Buffet(world's richest man) has openly expressed that he has no more faith in the U.S. $, at least in the next 10 years, people have realized the truth (?). The Oracle of Omaha rarely speaks...but he spoke and shook the world. No wonder Bill Gates(#2) is his good buddy.
• European Union (EU) taking into account the combined GDP of Germany, France, Italy, Netherlands, Sweden Norway, Denmark, Switzerland, Spain, etc etc already has a GDP 2 X (twice) that of the U.S.
• Add to that a growing unity amongst all the countries. It's only unity that makes a combination strong. History has proved that time and time again. How did the U.S. rise to be such a superpower ?
• EU countries have a balanced defense expenditure. Hence, it puts lesser strain on their economy.
• Cross-border trade is probably the single most important factor.

Lastly, I find this American culture of working 10 hours a day a bit "destructive" in the long run. All work and no play makes Jack a dull boy. Or else how would you explain that the Italians and French have afternoon siestas (yes, sleeping in the afternoon) and especially the French having such long holidays making so much money ?

I hope Google, with its creative culture changes this fixed American mindset.....and passes on some buck to me ;-) My financial analyst Debajyoti Dutta-Roy sez he's got much faith in the EU economy.

Oil touches $ 135 a barrel

Note 2007 June oil was at $65 / barrel.

So the price has now doubled !

Funny thing is I visited 3 banks during the last month.......

At first I was presented with many investment options.....

I listened...

Then I started lecturing on why it's not a good time to buy:

It's happening globally :

Rising Inflation
Food prices spiralling. Food riots !
Oil prices are leaving everybody confused.
Global nervousness.
Sub prime lending crisis hitting big banks also.
Huge deficits in some countries.
War, natural catastrophies, global warming is hitting economies indirectly


After some time, my investment advisors themselves start asking me for advice:

I told quite a few of them to buy gold. Or silver.

I really can't think of any within the next 4 months.

OIl hits record $115/barrel, $ slips and euro stable

It seems oil prices are rising up and up.

Investor confidence in $ is at an all-time low. Currency traders are all flocking to the Euro.

Check out this excerpt (Pablo Gorondi, Associated Press Writer):

"
Oil prices hit all-time highs above $115 a barrel Thursday with reports that oil and gasoline stocks in the United States were lower than expected and as the dollar hit record lows.

Light, sweet crude for May delivery rose as high as $115.52 a barrel in electronic trading on the New York Mercantile Exchange. It eased back to $115.23 a barrel by midday in Europe, up 30 cents.

On Wednesday, the contract settled at $114.93 a barrel.

In London, Brent crude futures were up 43 cents to $113.09 a barrel

The euro hit a new all-time high of $1.5982 on Thursday, its second record in as many days against the sagging greenback, and stood at $1.5966 by midday in Europe."

All global traders are going in favoour of the Euro and oil.

Why I think the European economy is thriving is:

Excellent understanding amongst all European Union countries.

Excellent network - transportation, communications. Almost all highways are like autobahns.

Total Free Trade Zones.

You can still buy those OIL STOCKS

Oil prices, once they breached even the $110 / barrel barrier......set people thinking that it's going to level off.

But, it will climb steadily for quite some time given the tension in the Straits of Hormuz and Middle East.

Well, 40% of world's oil passes through the Starits of Hormuz !

Check out the following excerpt

“Iran's Oil Minister Kazem Vaziri-Hamaneh, said in Kuala Lumpur on Monday there is no shortage of crude in the market and OPEC has no plans to increase supplies, in the latest rebuff from the producers group to consumer nation calls for more oil.

"Now there is no shortage of crude oil in the market," he said when asked if OPEC should release more supplies to the market to temper high oil prices. "The reason for the price hike is not because of crude supply problems."

Worries over Iran's nuclear dispute with the West have been a driving factor for oil prices this year. But Vaziri-Hamaneh said the country's crude output is expected to rise to 5.3 million barrels per day (bpd) by 2014, up from 4.3 million bpd currently.”

Our take : The consumer nations’ trends, especially developing countries like China & India….are very rapid rate of increase for oil. OPEC countries’ set a quota for oil production….once that quota is set….generally they do not reverse it.

This is because the quota determines manufacturing plans, production & management plans.

But demand is going to be higher.

Also, there PROBABLY WILL BE A TENSION WITH IRAN….this nervousness will prompt some developed countries’ to get more oil to funnel it into their reserves.

This might be the right time to but oil stocks…..they are going to go up due to increased demand.

FREE MARKET ECONOMY - the only answer ?

Professor Milton Friedman, IMHO, was one of the visionaries of economy.

Check out this article by Holcomb Noble in New York Times.com

" Conservative and liberal colleagues alike viewed Mr. Friedman, a Nobel prize laureate, as one of the 20th century’s leading economic scholars, on a par with giants like John Maynard Keynes and Paul Samuelson.

Flying the flag of economic conservatism, Mr. Friedman led the postwar challenge to the hallowed theories of Lord Keynes, the British economist who maintained that governments had
a duty to help capitalistic economies through periods of recession and to prevent boom times from exploding into high inflation.

In Professor Friedman’s view, government had the opposite obligation: to keep its hands off the economy, to let the free market do its work. He was a spiritual heir to Adam Smith, the 18th-century founder of the science of economics and proponent of laissez-faire: that government governs best which governs least.

The only economic lever that Mr. Friedman would allow government to use was the one that controlled the supply of money — a monetarist view that had gone out of favor when he embraced it in the 1950s. He went on to record a signal achievement, predicting the unprecedented combination of rising unemployment and rising inflation that came to be called stagflation. His work earned him the Nobel Memorial Prize in Economic Science in 1976."

My personal opinion : Friedman's dream / theory is COMING TRUE. Of course, there will be recessions and booms.

Isn't LIFE ITSELF FULL OF UPS AND DOWNS ?

But markets can flourish ONLY IN TRUE DEMOCRACY....

EMERGING MARKETS ..... reason behind their high returns

This basically started from the 1990 middle. Capital started shifting from developed countries to Emerging Markets .

This in turn FED THE GROWTH OF THEIR INDUSTRIES, THEIR INFRASTRUCTURE.

The main reason behind all this was the MASSIVE PRICE CUT IN TELECOMMUNICATIONS.

Think 'bout it.

It ain't no coincidence that the Emerging Markets started giving good returns after:

• Drop in price of phone calls
• Mushrooming of call centers and back office operations.
• Interexchange of IDEAS.
• Cut in Internet prices globally.
• Global access to all the markets throughout the world.

What did I tell ya? .....OIL TRADING AT $112 / BARREL !

Current events have thrown the markets in a STATE OF FLUX.

Some people are just TRADING IN HIGH VOLUMES IN OIL, OIL AND ONLY OIL .....making a killing in the process.

It may not last long.

Check this from reuters.com :

"LONDON (Reuters) - Oil rose to a record near $112 on Monday as a surprise weekend cut in the Federal Reserve discount rate and the sale of stricken U.S. investment bank Bear Stearns ( sent the dollar to all-time lows.

U.S. crude for April hit a fresh high of $111.80 a barrel. It was trading $1.15 up at $111.36 a barrel by 5:15 a.m. EDT.

May London Brent crude was $1.28 higher at $107.48.

"The recent oil prices have been swayed by the currency moves, including this latest rally to a record," said Tony Nunan, risk management executive at Tokyo-based Mitsubishi. "The dollar weakness is the factor at the moment."

The dollar plunged across the board on Monday as the spiraling U.S. financial crisis led to JPMorgan Chase acquiring Bear Stearns, stirring fears that more financial firms may become casualties."

High volume traders have bought into oil at large quantities at $60 / barrel and selling them now....making a profit of around 90 - 100 % in 8 months !

Now, since I'm just a poor analyst blogger and a consumer , I'm not amused.

But you may be.....'cuz you have

DOUBLED YOUR MONEY IN 8 MONTHS !

Major players RUSHING INTO oil market

As there is tremendous volatility in the stock markets, major players seem to be sensing it right.

Seems like one of the safest options for investment is the oil market. It seems to yield a steady profit.

Check out excerpt from Gillian Wong, Associated Press Writer :

"Oil prices surpassed $103 a barrel for the first time Friday as persistent weakness in the U.S. dollar and the prospect of lower interest rates attracted fresh money to the oil market.

Investors chose to see the comments as confirmation of their beliefs that the Fed will continue cutting interest rates to try to shore up the economy.

Lower U.S. interest rates tends to weaken the dollar, and crude futures offer a hedge against a falling dollar."

My analysis : If the u.S. $ weakens, the "horde mentality" will kick in, and investors will rush for oil, oil and more oil stocks.

More excerpts:

"

The Japanese government on Friday urged the oil cartel OPEC to increase output to help ease record prices.

"The high crude prices are gradually damaging the global economy. This will damage the economies of oil-producing countries," Minister of Economy, Trade and Industry Akira Amari said. "

My analysis :

There is global concern. The second largest economy is already in not too good a shape. There needs to be a serious global consortium to discuss the implications of skyrocketing oil prices.

Both from an investor's point of view.
As well as from a consumer's point of view.

Day Traders HIJACKING the Markets ??

There are wild swings in the markets. Move over, long-term investors.
Looks like the day-traders are starting to hijack the markets big time. This was to be expected, as more and more stocks can be

SOLD AT THE CLICK OF A MOUSE at the RIGHT TIME.

As GLOBALIZATION SETS IN, and access is available to more and more markets worldwide.


Following is by Jeff Kohler (Fun With Stock Index Futures):

"As market volatility increases, opportunities emerge for short-term investors who want to take advantage of large, daily price swings. Day traders flourish in volatile markets, but many long-term investors cringe at the thought of how their portfolios will react to these conditions. While shortening your time frame can help maximize profits and minimize risk in these conditions, it is also imperative to find the most suitable product for your investment needs.

Investors can use many vehicles to trade daily price movements. The most popular instruments for day trading include stock, option and futures contracts.

When trading stocks, investors don't worry about time decay, wide spreads or inflated prices due to market conditions. However, depending on the underlying stock, this is an expensive way to capitalize on price swings. Another disadvantage is the lack of leverage. Using margin, the leverage obtained (4:1) is a lot less than that offered by option or futures contracts.

Many investors choose options as their primary trading vehicle, because leverage is an important characteristic of day trading. However, during times of high market volatility, option premiums are increasingly expensive and less attractive to purchase. If you purchase overpriced premiums to leverage sharp market movements, changes in volatility may still create a losing position, even when you are right about market direction. "

SCARED ? WELL, THESE ARE UNCERTAIN TIMES......AND EVEN THE LONG-TERM INVESTOR SHOULD SPEND AT LEAST A COUPLE OF HOURS STUDYING THE MARKET TRENDS.

Wealthy Currency Traders playing mathem with the Markets ?

These are uncertain times.

But one suspects the markets are made more volatile with VHNWI (Very High Net Worth Investors) BUYING & SELLING CURRENCY in HUGE QUANTITIES.

Is this DANGEROUS ?

You bet it is...

Because a countries' currency is the very basic UNIT OF ITS ECONOMIC HEALTH.

Currency trading is based on the following premises :

Currency prices are dictated by supply and demand. That is, if there is a huge demand for, let's say, the Euro (which I am advising others to buy), obviously it jacks up the Euro price. You might even have a Euro : Dollar ratio that is not 1.2 times the actual value.

When the demands cannot be met, the price for that currency goes up.

The opposite is true.

The most intrinsic fact is that a currency of a country is a reflection of the economic health of that country itself.

Which brings us to the trillion $ question : What is the exact state of the U.S. economy ?

When Bill Gates decides on selling all his U.S. $ and buys into the Euro....is it mere speculative buying, or is the U.S. economy really falling into a quagmire ?

New South Korean President may boost economy

Lee Myung bak has been elected the President of South Korea. This will definitely give a boost to the South Korean stock markets.

And will probably start a chain reaction boost for all the Pacific Rim Countries' stock markets.

We have to remember that Lee Myung bak was a former Hyundai Group executive. Add to that, he was also the former mayor of Seoul.

So the new president has administrative as well as business credentials. In fact, the voters were deeply concerned as to which way the South Korean economy was headed.

We project a boost for the entire Pacific Rim region.

Oil Prices .......will they cross $ 100 / barrel ?

I made a decent sum of money about 25 % in 3 months investing in oil stocks around July - August. At that time crude was $ 65 / barrel........now it's hitting $ 98 / barrel & beyond.

I just sold them 2 days back.

I made this profit thanks to my financial analyst Debajyoti Dutta Roy who was pointing to a number of factors since 1 year. These factors exist even today, so I wonder what's gonna happen to oil prices ??

My advisor tells me oil prices WILL CROSS the $ 100 / barrel psychological barrier...It's just a matter of time.

Check out the facts : New York Crude has hit $ 99.29 dollars per barrel....similarly Brent North Sea touched 96.6 .....

What will push 'em up even further ?

An alarming fact is we're hitting a benchmark timeline of 2010 ...... beyond 2010 it seems DEMAND from oil will be far far greater than the PRODUCTION that can be had......

Take a look at the Hubbert Peak of Oil Production.

Add to that the ongoing Crisis in the Middle East.......it's escalating day by day.

Plus the Russia - Venezuela - China "closed circuit market" phenomenon.

Analysts are even saying crude oil might hit $150 / barrel at 2008 - end.

Google planning major EXPANSE in Europe

Google is once again showing its enormous business acumen, by expanding into Europe big time. This is sure to reap rich dividends for the company, because right now the European Union's economy is booming.

Quoting Lewis Krauskopf , Reuters & FT sources:

" Google is planning to expand its staff by a third, with most of the new hirings in Europe, the Financial Times reported on its Website.

The Web search company plans to hire several thousand engineers in Europe to create a research and development team in the region as big as in the United States, the report said.

"I aim to grow the EMEA (Europe, Middle East and Africa) engineering team as big as the one in North America. This is why I joined," the FT quoted Nelson Mattos, Google's new head of engineering in Europe, as saying.

Google's workforce ballooned nearly 13 percent between March and the end of June, growing to 13,786 full-time employees from 12,238 staff at the end of March.

The planned expansion is likely to be within the next three years, the FT report said."

Now check this out....the GDP of the EU is 1.5 times that of the US.

Plus the Euro is growing by leaps and bounds against the $.

The EU has a very large pool of extraordinarily gifted Engineers.

PLUS GOOGLE EXPANSION WOULD MEAN GREATER SERVICES FOR EUROPE, AVAILABLE FULLY IN EUROPEAN LANGUAGES LIKE FRENCH, SPANISH, ITALIAN, GERMAN, ETC....

GLOBAL STOCK MARKET SLUMP....what to do ???

The reasons behind the crash are:

Poor judgment in lending to sub-prime lenders

A general fear psychosis

Weakening of the U.S. $ against the Euro , pound & other global currencies.

A widespread worry about the oil supply / demand ratio against the backdrop of the gasoline wars.

So, what’s the forecast ?

We think the market would go down a bit…….but there’s not that need to worry. Wait till it goes down by about 5% more…..

THEN BUY INTO SOME BLUE CHIP STOCKS.

……….AND HOLD ON.

Gasoline Wars ….. the Changing Global Scenario

We are indeed at a rapidly changing scenario with respect to the rise and fall of some oil-rich countries.

Here are some excerpts from Global Envision, affiliated with the Mercy Corps, and our analysis….

“Another leader recently challenging Washington is Russian President Vladimir Putin. He threatened to point his military's nuclear missiles at European cities, if Bush extended the present California-Alaska anti-missile defense line to Poland and the Czech Republic. This threat was the latest illustration of a radical change in the Kremlin's foreign policy, with Putin repeatedly attacking Washington's stance in the international arena.”

His tough stance stems from the soaring wealth created by the extraction of Russia's enormous hydrocarbon reserves and his policy of bringing the leading Russian hydrocarbon companies under the control of the Kremlin and using them as an instrument of Russia's foreign policy.”

Our take : we are already seeing Russia putting in a missile battery system to the west of Poland, which can be a potential threat to NATO. There was also this incident of a Russian missile striking a field in Georgia, which is unprecedented since the end of the Cold War.

More…

“Four years ago Russia overtook the US to become the world's second largest oil producer after Saudi Arabia. Last year Gazprom, a Russian company, forged ahead of BP as the globe's second largest energy corporation by market value.

With petroleum prices rising fivefold between 1998 - when the Russian ruble crashed, forcing the Kremlin to beg for foreign financial aid - and now, the Russian treasury is overflowing with cash. It has since paid off its foreign loans and built up a foreign exchange nearing $300 billion.

Another example of oil riches enabling a country's leaders to act with uncommon resolve is Iran. Its refusal to suspend enrichment of uranium demanded by the United Nations Security Council has led to two sets of sanctions against it. But these have proved ineffective. Iran's exports are rising and the high oil prices mean that the government can go on using the hydrocarbon revenue on subsidies for food and fuel at home. “

Our take:

We can now see a nexus of Russia-Venezulea-Iran, quite formidable in itself….but the equation changes drastically if China also joins in. It is time to calculate what the total oil reserves plus production would be of these 3 or 4 powers....

Oil $77 / barrel & climbing….to what ?

Oil prices are at a new 11 – month high…but question is : to what levels can it rise?

The present rise is linked to :

• North Sea production problems
• Destabilization worries in the Persian Gulf
• Speculators driving in cash

So high will it rise….

Now, take points 2 & 3….

We don’t see any let up in this scenario…

Iraq is more messed up + Iran will play more hardball + the Afghanistan linked pipeline project is in jeopardy + Venezuela is reaching an oil pact with China & other countries

No less important - Speculators like you & me are flocking like hordes, caught in a “buying frenzy”.

End result ?

We are speculating it’ll rise to $90 by year-end.

Still time to buy those oil stocks….just still about a little bit time left.

Why buy more Oil Stocks ?? ….and which ones to buy ?

We know that whenever oil prices move up, so do their stocks.

Now, some experts are saying that oil production is going to peak in three years…I mean it’s all downhill from then on !

But what about the demand? The demands not going to slow down.

Also, China needs a huge quantity to meet its booming infrastructural needs.

Add to that growing vehicles in India & other South Asian countries.

Now which oil stocks should you go for?
-the behemoths, the midcaps, or the smaller ones.

Stick to the midcaps…..because the big ones might not be able to manage with logistical problems. Amongst the smaller ones, though showing initial promise, many might not be able to cope with smaller capital.

More on Oil stocks

I'll be analyzing more on which Oil Stocks are headed for a boom time.

Buy Oil Stocks NOW

Oil prices are increasing due to worries about a future Iran-U.S. showdown.

Quoting this report in Reuters :

“Iran's Oil Minister Kazem Vaziri-Hamaneh, said in Kuala Lumpur on Monday there is no shortage of crude in the market and OPEC has no plans to increase supplies, in the latest rebuff from the producers group to consumer nation calls for more oil.

"Now there is no shortage of crude oil in the market," he said when asked if OPEC should release more supplies to the market to temper high oil prices. "

"The reason for the price hike is not because of crude supply problems."

Worries over Iran's nuclear dispute with the West have been a driving factor for oil prices this year. But Vaziri-Hamaneh said the country's crude output is expected to rise to 5.3 million barrels per day (bpd) by 2014, up from 4.3 million bpd currently.”

Our take : The consumer nations’ trends, especially developing countries like China & India….are very rapid rate of increase for oil. OPEC countries’ set a quota for oil production….once that quota is set….generally they do not reverse it.

This is because the quota determines manufacturing plans, production & management plans.

1. But demand is going to be higher.

2. Also, there PROBABLY WILL BE A TENSION WITH IRAN….this nervousness will prompt some developed countries’ to get more oil to funnel it into their reserves.

This might be the right time to but oil stocks…..they are going to go up due to increased demand.

Globalization & the Global Stock Market

As globalization picks up, it is becoming imperative to keep in view the inter-relationships of the GLOBAL STOCK MARKET. The interdependencies, the “mass psychology”, the macro tradings between countries…all these come into play.