The last time I talked about the markets, it was somewhere close to March, with the budget session grabbing the limelight. The current darling of the market seems to be Europe, and its deficit problems. Greece, Spain and Portugal, all seems to be in big trouble - and they may spell doom for the common currency. US may be breathing the sigh of relief, for two reasons - (a) Its banks are no longer under the spotlight, and relentless attacks from bears all over the world, and (b) USD would continue to be the De-facto reserve currency for the next decade at the least.
So we have US almost out of trouble from here - substantiated by economic data as well as the market sentiments there. Asia was never under direct trouble (except perhaps fears of bubble in China). Which leaves us with the Europe and all its worries. Markets worldwide are crashing everyday on some news from the region - be it the fresh debt issue cut-offs, or the actions from the Central Bank of Spain. However, in the larger scheme of things, does rest of Europe matter? Take out Germany, France and UK, we are left with a lot of small debt-ridden countries. As long as no one is seriously doubting the debt servicing ability of the big 3, I do not see Europe being too important. They were never the growth drivers in the world economy, and there is no reason why they would hamper it either. It would cause some panic, and spike up the volatility levels, but in all, it won't be catastrophic. People on the street still do not fear for their jobs the way they did in 2008, and this indicator works way better than all the volatility indices of the world to measure the panic levels.
I'm not saying that it would lead to nothing. There would be serious re-rating of the whole of the world. By no matrices, European nations deserve a better rating than the Asian ones. US and UK may not be as safe as they were 10 years back. It would be a slow and painful process, and every few months, some Euro-block country would be down-graded. However, it should not spook the markets, these nations are over-rated and it would get corrected soon. Very soon, some of the Asian economies might get upgraded - as early as next year.
In a nutshell, I remain bullish on the local markets. Even though the charts tell otherwise, and the world thinks otherwise. I think after the clouds clear over the European skies (pun intended), it would be smooth flying all around.
Food for Thought: Germany bans short-selling, and markets tank. Spain merges four of its banks and markets tank. Rumors of face-off between North Korea and South Korea, and markets tank. We live in a world where people trust one yellow metal more than anything else. All in a hope that when the world ends, there would be two guys left - me and the jeweler who would buy the metal from me.
So we have US almost out of trouble from here - substantiated by economic data as well as the market sentiments there. Asia was never under direct trouble (except perhaps fears of bubble in China). Which leaves us with the Europe and all its worries. Markets worldwide are crashing everyday on some news from the region - be it the fresh debt issue cut-offs, or the actions from the Central Bank of Spain. However, in the larger scheme of things, does rest of Europe matter? Take out Germany, France and UK, we are left with a lot of small debt-ridden countries. As long as no one is seriously doubting the debt servicing ability of the big 3, I do not see Europe being too important. They were never the growth drivers in the world economy, and there is no reason why they would hamper it either. It would cause some panic, and spike up the volatility levels, but in all, it won't be catastrophic. People on the street still do not fear for their jobs the way they did in 2008, and this indicator works way better than all the volatility indices of the world to measure the panic levels.
I'm not saying that it would lead to nothing. There would be serious re-rating of the whole of the world. By no matrices, European nations deserve a better rating than the Asian ones. US and UK may not be as safe as they were 10 years back. It would be a slow and painful process, and every few months, some Euro-block country would be down-graded. However, it should not spook the markets, these nations are over-rated and it would get corrected soon. Very soon, some of the Asian economies might get upgraded - as early as next year.
In a nutshell, I remain bullish on the local markets. Even though the charts tell otherwise, and the world thinks otherwise. I think after the clouds clear over the European skies (pun intended), it would be smooth flying all around.
Food for Thought: Germany bans short-selling, and markets tank. Spain merges four of its banks and markets tank. Rumors of face-off between North Korea and South Korea, and markets tank. We live in a world where people trust one yellow metal more than anything else. All in a hope that when the world ends, there would be two guys left - me and the jeweler who would buy the metal from me.
