Seeking Alpha
View as an RSS Feed

Vikram Saxena  

View Vikram Saxena's Comments BY TICKER:
Latest  |  Highest rated
  • Rate Cuts and Inflation: Linkage Overblown? [View article]
    SIMPLE d:

    It is again a US centric view. What we got to realize that the US and US consumption is no longer the prime driver when it comes to the demand for commodities. That is a fundamental shift from the past.

    It is easy to blame excess money supply for inflation. However, in the US economic structure most of the costs are in distribution and marketing; not in production. The raw material cost is a very small percentage (except for energy which is a tax across all elements).

    I agree that the US Dollar is a major factor. However, there are other factors in play apart from interest rates when it comes to the dollar. Look at the interest rates in the Greenspan and the value of the dollar to get an alternative perspective.
    Mar 3, 2008. 09:01 AM | 1 Like Like |Link to Comment
  • Rate Cuts and Inflation: Linkage Overblown? [View article]

    The issue is not whether inflation is good or bad. There is no doubt about that.

    The issue of debate is the degree of control which the Fed has in reducing inflation in the current environment. Since the inflation is not being driven by US consumption, the senstivity of inflation to the Fed funds rate is much lower than it used to be in the Volcker era.

    On the other hand, what is quite certain is that lower rates will provide support to the US economy. Once the credit markets and the housing markets stabilize, the Fed can attack inflation at will.

    Even in Volcker's time, what got us out of the inflationary spiral was increasing effeciency and greater energy supply. His rate increases helped limit US growth till the energy demand/supply situation became balanced again. However right now, any rate increases in the US will not significantly affect the demand in the emerging economies. They might strengthen the dollar but there are many other factors at play when it comes to the dollar. Remember that the Fed Funds Rate were much lower and the Dollar much higher in the Greenspan era.
    Mar 3, 2008. 07:04 AM | 1 Like Like |Link to Comment
  • Rate Cuts and Inflation: Linkage Overblown? [View article]

    A lot of people in the West confuse the correlation between the markets and the economies of the developing economies. The markets, especially the equity markets, will continue to be strongly correlated. However, the underlying economies are not.

    Growth in China and India is not only been driven by the West but also their internal growth. These economies were long shackled by artificial constraints, which are gradually withering away and they are going to play catch-up with the rest of the world.

    To learn more, watch the interview on CNBC with Mohammed El-Erian (PIMCO/Harvard) one of the most respected investors on Wall Street. El-Erian understand emerging markets better than most.

    Around 4:00 Minutes is where the discussion about emerging markets start.
    Mar 2, 2008. 10:50 PM | 1 Like Like |Link to Comment
  • Rate Cuts and Inflation: Linkage Overblown? [View article]

    We live in a different world than which Volcker lived in. The USA no longer is the largest driver of raw-material consumption that it was two decades ago. The growth in demand is coming from countries whose economies can grow significantly organically, with out much help from growth in the developed world.

    Increasing interest rates in the USA will not have a significant effect on the consumption of raw-materials in the emerging markets. Hence interest rates are not the right tool when it comes to commodity driven inflation in the USA.

    Incidentally, what fixed the energy driven inflation during Volcker's time was the increasing energy effeciency and greater oil supply coming on line. We need to focus our interest on that; not on the false hope that decreasing growth in the West will sufficiently decrease demand in the emerging markets.
    Mar 2, 2008. 09:37 PM | Likes Like |Link to Comment
  • Apple Buybacks: Still a Bad Idea [View article]
    There are very few technology companies which pay a dividend. Among the mega-caps only Intel and Microsoft pay a dividend and they have a near monopoly. Other firms which do not have such a monopoly, do not pay dividends. The reasons are obvious. Most technology companies operate in an environment where there can be significant fluctations in revenues and profits. Dividends require a secure stream which is not guaranteed for technology companies. That is why stock buybacks make more sense the management can use the cash to enhance long term shareholder value.
    Mar 2, 2008. 10:41 AM | Likes Like |Link to Comment
  • 2007 Earnings: -4% [View article]
    Could you post some analysis of S&P - Financials?

    Financials are in a mess. And the way they are taking write-downs by marking to a market which does not exist, the earnings (losses) are highly suspect. The interesting part is that once the credit market recovers, the same banks will be taking huge profits on these securities.
    Mar 1, 2008. 08:52 AM | 1 Like Like |Link to Comment
  • Buying Google, All the Way Down [View article]
    Nice post especially about the port of advertiser behavior during a slowdown. In a slowdown revenues are more important than margins and the ad spending will focus on channels which result in short term revenues. And there is nothing like a paid search click when it comes to converting ad dollars to revenue. There is a reason why the keywords are being bid up. advertisers are not that stupid.
    Feb 27, 2008. 09:23 AM | Likes Like |Link to Comment
  • Blodget's Latest Google Attack: Much Ado About Nothing [View article]
    This is a trading suggestion with limited downside (cost of option) and substantial upside even if Google makes a 4-5% move upwards to retrace the losses the stock took onTuesday.

    Wednesday's action was encouraging; the stock held support around the next support level ($500.92, approximately $500). It then traded between $505 and the next resistance level ($508.58) before closing above that level.

    The overall market action was bullish on Wednesday; there was volume on the upside and the market digested a lot of bad news without giving up the gains. The need to test the January bottom is being talked about less as stocks rally on bad news.

    Google is focussed on increasing the value proposition of their advertisement offering. This has and will continue to result in higher bids for their ads. Even if the total click count takes a hit, the total revenues will not. As the industry consolidates, increasing the quality and effectiveness of their offering will separate Google from the competition.

    A few months ago, the stock traded almost 47% higher than its close on Wednesday. From a fundamental point of view, little has changed to justify the extent of the pullback. The stock is ready for a short-term bounce.
    Feb 20, 2008. 09:20 PM | Likes Like |Link to Comment
  • Google Warns that Reducing "Accidental Clicks" Could Hurt Revenue [View article]
    Blodget has already clarified that the only sentence added in the 10K is:
    "In addition, we may continue to take steps to reduce the number of accidental clicks."

    Much Ado about Nothing.
    Feb 19, 2008. 11:10 PM | Likes Like |Link to Comment