Rakesh Saxena

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.

Those Illusory Stimulus Packages

Yes, DaveW--this is a typo--probably an error at my end. I assume one of our friends at SA will pick this message--Many thanks - Rakesh


On Dec 21 12:09 PM DaveW wrote:

> "Disclosure: Author holds long positions in QQQQ and SPY"
>
> Typo most likely, author is Short QQQQ and SPY based on many recent
> posts.