Rakesh Saxena

Emerging Markets: Millions Returning to the Natural Economy

Nothing wrong with returning to our rural roots, omooc. At least we would not have to worry about stimulus packages and TARP funds. Many thanks - Rakesh


On Feb 13 10:24 PM omooc wrote:

> What's wrong with returing to your rural roots? In China, a few years
> in the city allowed one to save some money, thereby allowing one
> to build a house in the rural area, and to return there from time
> to time. In the Chinese-language paper I read, I saw a photo, a couple
> of days ago, on the front page, showing the backside of a bicyclist,
> returning home, with a big washing machine (by Haier) at the back.
> The general attitude seems to be positive -- a few years in the city
> is nice, but returning to the rural home with your spouse and family
> is nicer. With simple tastes and no debt, plowing the field is gainful
> employment.

Emerging Markets: Millions Returning to the Natural Economy

Dear Proximo: FYI, my main business in a bull market has been merger-arbitrage type transactions, which provide the window to go long one one stock and short another. I am not a value investor (long term) because, since the early 1908s I have not trusted the accounting and disclosure in the marketplace. So I have focused on trading "misalignments", a bit akin to spread (pair) trading. Many thanks - Rakesh


On Feb 13 10:10 PM PROXIMO wrote:

> Rakesh---You have indicated that your preferred investment style
> is short sales. Just curious, if conditions improved, say, several
> years out and a bull market in stocks likely, would you still be
> most comfortable focusing on opportunities in the short sector? Or
> would you look to go long? Just curious---if you happen to read this
> comment. Thanks, PROX.

Emerging Markets: Millions Returning to the Natural Economy

Dear Kay: You are correct insofar as certain rural areas in these markets are dominated by foreign remittances, criminal gangs and aid packages. In that sense, the term "natural economy" needs to be contextualized in today's reality. Many thanks for your comment. - Rakesh


On Feb 12 02:02 PM Kay Moseley wrote:

> "Regeneration of the natural economy"? Would that it were true!
>
>
> Unfortunately, more and more of the countryside in the "emerging
> markets" now resemble rural slums -- dependent on purchased food
> and other inputs and thus on either some sort of rural wage work
> (including massive narcotics markets, here and there), remittances
> from relatives with urban or overseas jobs, or on "humanitarian assistance"
> (surplus food + foreign NGOs). This is why food prices, poverty and
> protests figure (as in the last paragraph of this interesting article).

India Unraveling: Stay Short Emerging Markets

Thanks freefall51. As far as the market is concerned, it will be interesting to see how long this mini-bull run can go on in the face of clear and unequivocal facts to the contrary. Part of it, of course, is that most investors are fundamentally bulls, and issues like the Obama stimulus, auto bailouts etc are treated as positive signals--in my view, as you know, these rescue packages are actually bearish indicators. - Rakesh


On Jan 03 10:41 PM freefall51 wrote:

> Rakesh,
>
> keep going. I like your articles.
>
> BTW, I think the latest mini-bull is just based on a temporary lack
> of sellers after the recent tax loss sell-off and due to the fact
> that the indices hit a major uptrending support line. The market
> tries to sneak in an upswing on low volume. This is not logical to
> me given the overall conditions but the market proves me typically
> wrong.

India Unraveling: Stay Short Emerging Markets

Thanks freefall51. As far as the market is concerned, it will be interesting to see how long this mini-bull run can go on in the face of clear and unequivocal facts to the contrary. Part of it, of course, is that most investors are fundamentally bulls, and issues like the Obama stimulus, auto bailouts etc are treated as positive signals--in my view, as you know, these rescue packages are actually bearish indicators. - Rakesh


On Jan 03 10:41 PM freefall51 wrote:

> Rakesh,
>
> keep going. I like your articles.
>
> BTW, I think the latest mini-bull is just based on a temporary lack
> of sellers after the recent tax loss sell-off and due to the fact
> that the indices hit a major uptrending support line. The market
> tries to sneak in an upswing on low volume. This is not logical to
> me given the overall conditions but the market proves me typically
> wrong.

India Unraveling: Stay Short Emerging Markets

Dear HaavBline: In response to your question about infrastructure projects being shelved (rather delayed and delayed), part of the problem is that the machinery to implement many of them is simply not there; then there are those regular activist protests against dams and factories on rural land, rampant corruption, and vested political interests. When you put all that together, you can grasp the point: there are so many incomplete projects, that new announcements are meaningless, regardless of size. Many thanks - Rakesh


On Jan 01 10:49 PM HaavBline wrote:

> Thanks for a good report on a local situation. It is true the case
> in India could be happening in many emerging markets, however, different
> countries have different strengths and weakness, and will have different
> policy response and different capabilities to adapt to the sea change
> in global economoic environment. China, India, Mexico are producing
> countries that should benefit from sharply lowered commodity prices,
> Russia, Brazill, Middle Ease may suffer more.
>
> The Indian response about infrastructure spending reported by Rakesh
> puzzles me. Why are projects shelved when India needs to stimulate
> domestic spending? Why did India announce a paltry $8B stimulus package?
> (Why bother to announce it?) This seems to be very different policy
> responses from most other countries. India's balance sheet may not
> be golden, but as far as I know it is not in dire strait either.
> So I wonder what the Indian central & state goverments are doing?
>
>
> I agree about the Obama factor, market seems to WANT TO warm UP to
> the expectations of the big stimulus package. It probably will be
> announced soon after he takes office in late January, then we will
> see what happen. Market willl probably be dogged by questions about
> the financing and viability of that package afterwards.
>
> Another reader made a good observation responding to another article:
>
> From the standpoint of purchasing power parity (or considering PP
> differences in China & US), even a $1T Obama stimulus package
> will have somewhat less impact to the US than the $580B Chinese stimulus
> package will have to China.

India Unraveling: Stay Short Emerging Markets

Thanks Investor88. There is little doubt that the current behaviour of the equity and bond marketplace is contradicting extremely strong bearish fundamentals. And then there are the Obama bounces which are more than likely this month. It is indeed a difficult environment to trade short on leverage; but the bearish bias must remain intact. - Rakesh


On Jan 01 09:24 AM investor88 wrote:

> I salute Rakesk for not only giving logical well researched view
> but acting on it [short EEM]. There is now a flood of bullish calls
> for a turn around in 2009 [in SA, everywhere you look] -- on balance
> I place more weight on Rakesh's opinions unless the markets show
> otherwise.