Re: Why bears still have strong case !!!
As I am chating with one of my friend about these concers, he simply put forward a question below "We all know that FED will increase its Interest Rates and its happenning since 2001 @25 basis points each and now we are nearing to 5%. (remember market moved to its histarical new highs during this period) Do you expect FED will increase the Interest Rate abnormally say > 1% ? When no such thing will happen in the near future, where is question of FED Interest Rates impacting the Markets? Do u understand the cost of shifting funds from one market to other? It is more than 25 basis points what FED will increase, so from where these so called Institutions are going to gain from the Fed Securities and how much? Today, they might lost more than the anticipated gain from the interest rates, if they really moved funds from the emarging markets back to US."
And asked me to answer above, which I dont have any clue about it.
Hope, you masters might provide some clue?
Srini - London
nkpanjiyar said:
Bull markets are always driven by liquidity. Liquidity is always driven by low interest rates. World over, all central banks are tightening the liquidity, and there are no clear signals that they will stop any time soon. China is the latest country to join the tightening bandwagon.
The reasons global equity markets sold off still remain – Inflation, Oil and Fed. Inflation data came worse than expected. Oil hovers above $70 and Fed policy is now hazier on where they will stop. Fed fund futures have now fully priced in an interest-rate hike at the Federal Reserve's next policy meeting on June 28-29, and chances are at about 70 percent for another increase in August.
India story is still strong. But the issue is - we do not have domestic money tankers to take the market up on our own. We need FIIs support, and that support will depend on global liquidity. So, there’s no point singing a tune (Valuation) that does not move the market.
cheers,
nkpanjiyar
The reasons global equity markets sold off still remain – Inflation, Oil and Fed. Inflation data came worse than expected. Oil hovers above $70 and Fed policy is now hazier on where they will stop. Fed fund futures have now fully priced in an interest-rate hike at the Federal Reserve's next policy meeting on June 28-29, and chances are at about 70 percent for another increase in August.
India story is still strong. But the issue is - we do not have domestic money tankers to take the market up on our own. We need FIIs support, and that support will depend on global liquidity. So, there’s no point singing a tune (Valuation) that does not move the market.
cheers,
nkpanjiyar
And asked me to answer above, which I dont have any clue about it.
Hope, you masters might provide some clue?
Srini - London