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Friday, July 28, 2017

Stalemate for economists, investors and Central bankers.New Base and Norms to save from Capital War

It is a state of emergency and stalemate for economists, investors  and Central bankers. US, Europe Japan, China and Indian economies are  big and there is Inflation at times and mostly stagflation, saturation for last 20 years in US and Japan. Countries have tried to meet this by playing with M3 and Interest Rate. Japan and developed part of Europe is facing the same issues. The reason to have Arabian Refugees is to have is to get labour force and also new buyers ..China depreciating currency after 10 years and reduced it's reserves by almost 25%. USD denominated reserves are held by Japan, Switzerland, China, India. No country in the world is cash started. Money supply and printing has been enormous in last 10 years to ride over the Lehman Brothers, US and European banks crisis. Hence ..hedging, speculation and politics will drive the currency parity and not even Demand and supply Economics. USD index at 94 median approx 85 , weak and worst at 70-80 range, USD/JPY 110 , showing JPY weak as ideal stable situation would be 85 around, USD Euro and Pound has lost its relevance. RMB and Rouble is of not very stable dependable currency. UAE currencies are down due to Crude and Construction slow down. Infact Saudi levied tax for first time ever. INR is no Major impact currency but gained almost 8% in last 2 years. Internationally, I feel, Currencies , economic slowdown, inflation and stagflation are playing a major role. Stable and growth oriented levels for gold is 1350-1700 range whereas it is 1100-1250 range for last 2 years, revival scene is due to commodity prices - Aluminium is coming up to 1700 levels is a big revival signal in Consumption, copper is up 6300+, zinc is up. Capital - infrastructure capital formation is lowest, average value of online transactions and also average value of smart phones have gone down..showing the saturation levels. Money flowing out of other assets into crypto currency is another reason for reduced cash and flow of capital from one country to other. Accordingly, if one is shower term investor , one has to be hyper active , in long run, may be in 10 years re-pricing of world assets and currency under a new system will have to be done. The question is of safe heaven , return, risk and Dominating Currency in next 5 years. There is very little to change and it will be range bound. USD may actually appreciate and Russian energy trade may change the factors and parity. A crypto backed by assets will further change the Parity. Happy Investing! Dinesh Goel. July,17

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