Monday, December 14, 2015

Stockmarket : Potentially A Bright Spark In The Short Term

The economy is backsliding and deflation is staring but it's kept 'inflated'...

Strange outcomes can be derived with the mix of politicians, businesspeople and lobbying groups. When commodities prices were high, runaway costs pushed prices higher, costs of living increases and 'growth' were reflected in the buttressed numbers aka GDP.

Is there anything wrong with cheaper factors of production (commodities)? NO!

But, every other articles you read (nowadays) mourn the drop of oil prices, the weakening freight rates, the cheaper commodities...why?

The Wall Streeters are trying to tell the Main Streeters that 'deflation' is bad for the economy. The truth is, banks and financial institutions are flooded with loan & derivatives backed by inflated assets (as prices eased) and bonds of huge corporations related to Oil & Gas, Properties, Commodities, including sovereign borrowers. 

If 1997/98 & 2007/08 financial crisis are bad, the next one will be more destructive; we are sailing into the eye of the storm.

There were screams of uncertainty and pains as the world stock markets swing down. But, what have change fundamentally? Nothing!! The expected rise in interest rates is 'Expected'! It is the financial writers, coaxed on by parties with vested interests, who are trying to 'talk up' the market.

My take is:

~ There will be a re-rating of the stock markets
~ Financial writers will pen fresh ideas that 'cheaper commodities prices are good for the global economies as cheaper costs of production will reignite demand
~ The evergreen smart monies will be looking for safe haven to 'place their bets', that is, invest
~ NPLs and sovereign flops will be allowed to die and debts forgiven (political influence pay for such follies)
~ In the event of war or proxy wars, fresh demand will be generated due to reconstruction and repairs
~ Brick & mortars businesses will re-invent themselves and deal via e-Markets & a whole host of new industries will florish

Following the re-rating and a paradigm shift, the stockmarkets will enjoy a healthy rebound into 1Q/2Q 2016

In the short run, Singapore will ride her lucky star into a global re-positioning, funds allotment and asset allocation : funds will find their way here as we are the last 'safe haven' conduit for Asian wealth.

I am concern of a late turn-down towards late 2016 as the 4-Year cycle low falls in. In the longer term, the 10-Year cycle low comes a-calling in 2017

Enjoy and experience the short term reliefs.

Good luck; happy investing and trade with extreme care...When you make your bucks, please spare some to the less fortunates

No comments: