Monday, October 31, 2011

Hopium & Healium

Hopium & Healium !!
Europe has rolled out a “pain sharing” plan for banksters to participate in their own losses. What a novel concept, share in socializing losses, an act of belated genius. Of course the timeline for instituting this measure is 2013, which suggests the hopium phase still lingers. Still I think we can see actual intent here.
To me this suggests that the Hopium adminstration is firmly committed to propping up busted states and bloated bankrupt european nations.
Viewers of our "witdom Blog" know that for the past few months Europe & America been pushing what we call economic "hopium.
Despite these positive data points, don’t confuse us with economic Pollyanna’s. We know the American economy faces major hurdles, primarily a 9.1 jobless rate and millions of underwater homeowners. And we acknowledge that many of the recently better data points are coming off the easy comps of historically low levels.
Healing of Euro Zone : Greece to receive further tranche of aidPrivate lenders to take 50% haircutEuro banks to raise €103 billion (£114 billion) in capital by July 2012Italy to reduce gross debt to 113% of GDP by 2014European Financial Stability Facility (EFSF) to be boosted to €1 trillion.
The details of a number of key issues in the plan are “vague” and could well fail to stand up to scrutiny. The announcement of a 50% haircut for private bondholders as potentially unsustainable and says that there could prove to be “significant wiggle-room for banks to avoid the necessary degree of recapitalization.”
Europe would stand to benefit from a consolidation of power relating to fiscal policy,.” Ultimately, the single currency needs a euro zone political institution with executive power over fiscal policy. All of this seems like nit-picking today but in the months ahead markets will focus on these key issues.”
According to our previous blog our love for Dollar gave us fantastic return where rupee touched high of 50.20. We did tell you that Equity around world would bounce back and it has bounced back 15% from oversold zone. This rally is volatility rally due to technical short covering. Value based rally is not seen in near term since fundamental since remain weak.
Only three leading indicator data can make me equity bull and they are JOBS, JOBS & JOBS.
Thanking you,
Atul Sikrai
Sr Vice President & Head of Equity
wiTdom investment advisory.