Xpression

Last Year had been good for US Bonds, can it continue. Does this chart tells you that it is closer to end of bond rally. Does this also means Dow/Equities  might surprise on upside very soon !!! Focus on circle, which is support level for 10 Yrs.

While CDO, CDS, are getting all hatred adjective like Toxic Assets, Weapon of Mass Destruction and Uranium 237 and so forth. It is worthwile to revisit what we thought of the same financial innovation 15 years back. To start with we gave fancy name "Financial Engineering". Following is excerpt from leading weekly magzine coverstory in year 98-99 ( Don't remember exactly but it was Business Week  ) It goes like this : "Financial engineer don't wear  lab coats. They don't experiment on rats or perform gas chromatography. Their raw material - money is'nt as jazzy as physict or biologist investigate. But the innovation they produce will contribute just as much to economic growth. May be more, in fact. Because without science of finace, all other sciences are just a bunch of neat concepts. Ideas begins to contribute to human betterment when they're financed by venture capital, stock offering, loans, or buyouts. The finance revolution in the past 2...

Some thing to focus on for Gold. Fresh Shorts on Gold is being Created. Focus on this chart.

Great Movie - Zindagi Na Milagi Dobara. Movie certainly had a message which struck to me. And it's a message which applies across, whichever way u would like to cut and paste. While i went to movie thinking about last week's roller coster market it was natural to draw parallell to Investment Strategy also. So here it goes : First is - Our Biggest surprise in life comes from the most feared area of life. And conquering that fear adds multiple dimension to our existence and so living. That's true in our investment strategy also, market hates uncertainity and bad news. But most profitable trade emerges from this kind of scenario. When we are so fearful that not to even look at portfolio that's the moment to cease it. When we hate the screen the most, screen is calling us. Think about it all worst moment in last 10 years - 9/11 (2001), NDA government fall (2004), US Housing Market Collapse (2006) and very recent Lehment Crisis (2008) - Market has returned invariably ...

While 3 Year T-Bill rate is quoting at 0.0000%. Holder of US T-Bill Rate are making money and there is a gloom in US Equities. On the chart it looks like Biggest Fake Move

I think we are all set to high adrenaline week. As US downgrade news will hit your screen and price points will react. There will be anticipated air of panick. Already saudi market has tumbled by 5.5%. This will be one of the week where emotion will take over rationale for most of the seasoned minds also. But it is critical to go back to basic before we enter in to roller coster week. Most importantly as a indian we are ower owning Real Estate and Gold. Both this asset class are trading at almost life time high. Equity is under owned and it surely near cyclicle bottom. So it is very critical for Indian Investor to take this fall with positive frame of mind. In a way now onwards "Seasonal Discount Sale" will be on for equity so keep your shopping list ready 

I think we are coming at the fag end of Rate Cycle. Few Facts : Short Term rates has already doubled 1-10 Yr Spread is 10 bps. 5 Yr OIS - 10 Yr spread is -ve. Repo-CD rate at historic high (Sparing 2008 spike) Supported by fact that Inflation may cool down by Sep. It leads us to interprete that we have peaked in terms of Short Term rates. So good to Invest in Short Term Funds or Lock in FMP for 2-3 Years. In terms of  10 Yr G-Sec, Yield curves need to steepen and hence there is a scope of upward yield for 10 Yr. Considering heavy implication of Oil on Fiscal policy, we should wait for second half borrowing program befor taking view on 10 Yr. Also Short term rates has great predicting power for equity return for 2-3 Year Period. So if Short term Interest has peaked equities will find Bottom in next 3 Months. Last leg of rate hike is most painfull. One needs to get interested in equities post 16th June Credit Policy. Happy Investing