Wednesday, May 24, 2006

Where do US markets go from here?

I think the US markets will not go anywhere till 29th June - the day of the next Fed meeting. Till then, I think there are 2 issues that will prevent US markets from going up:

a) Commodity prices: If commodity prices go up, inflation fears heat up. If they fall, a lot of emerging markets indices go down (as many are leveraged to commodity prices - see brazil), which heighten the uncertainity in US markets.

b) Inflation fears: If economic data is stronger than expected, inflation fears heat up. If it is weaker, economic slowdown concerns hit the market.

Best thing that could happen is, Fed leaves the interest rates unchanged, and inflation does not shoot up due to lagged effects of past monetary tightening. But that can only be understood in retrospect by historians.

If Fed stops raising rated next month, there will be a section of the bond market that will worry that Mr. Bernanke has gone soft on inflation in pursuit of growth. So 10-yr yields might rise in anticipation of this higher inflation. So equity markets could still get hurt.

Thursday, May 11, 2006

Quotable quotes

1. "Ati ka bhala na bolna, ati ki bhali na choop.. Ati ka bhala na barasna, ati ki bhali na dhoop", or The middle path is often the best path. - Kabirdas

2. An intelligent person has a unique theory of life. A wise person knows that there are various theories of life, that one theory cannot fit all, and that different theories assume significance at different points of time. Sometimes, Quantum mechanics helps explain nature, and sometimes Einstein's Relativity, and the two need not sync with each other*.

3. Tit for tat is the best economic philosophy in competitive situations. It is also the best one socially. In other words, do unto other (person) what the other (person) does to you.

4. The more I practice, the luckier I get - Anonymous

5. Stay Hungry, Stay Foolish. - Steve Jobs

6. Either things will happen for the good, or they will happen for the bad, so why worry.

7. It is not right to say that things have happened for good when they have happened for bad - slowly but surely it obfuscates the ability to perceive truth.

8. You get what you ask for - Gandhi

9. "When you want something, all the Universe conspires to help you achieve it" is true only under special conditions.

10. You can be a bull, or you can be a bear, but there is only one way to be correct.

11. Happiness is a state of mind, and not a state of being (or existence).

* As physicists say often, one of Quantum mechanics or Einstein's relativity is wrong - they cannot both be correct at the same time.