We will be limiting our commentary in the coming months to Global and Indian Equities. We will be focusing more on Physical Gold.
We stick to our predictions that the benchmark Global Equities including India will re-test March 2020 lows within December 2020. Our predictions of the indices testing March lows by September 2020 have been pushed further by one quarter.
This prediction has its roots in the
COVID 19 virus and also
reckless money printing by the Central Banks of the
developed countries. USA is
leading the world in terms of printing trillions of
keeping any hard assets ( precious metal incl Gold and
other foreign currencies
viz Euro, JPY etc ) as a collateral.
The global equity markets in the developed world were bullish in the month of July 2020. This rally is beyond our understanding. NASDAQ COMP in USA is trading at its life time highs of 10900+. The said equity markets are not based on fundamentals. Vaccine for COVID 19 is a very big gamble !
The COVID 19 virus has again re-surfaced in EU and Australia. In USA the virus is now infecting masses in villages. Brazil, India and Russia are having problems as the virus seems to have entered the "community transmission" stage. The complexity of this virus is still not fully understood by scientists all over the world.
Investors are advised to stay away from
Investors should focus on investing in Physical Gold. Spot Gold in Asia tested a new life time high of US $ 1991.00 pto on 8/3/2020. The price level of US $ 2000.00 pto now is just a formality.
Our price target by December 2020 at US
$ 2400+ is still
Cheers for Gold !
Gold prices today tested a new lifetime high
on Spot Asia basis at US $ 1943.80. It is now trading at US $
1920.00 as I print this update.
Gold prices surged pass its September
2011 high of US $ 1920.00 pto today in early morning trade
at Sydney and Tokyo Spot.
Our prediction on Gold is again Bingo !
Our next target is US $ 2400.00 pto or even
US $ 3000.00 pto by end December 2020. Let us see if our
prediction again comes true ?
Three Cheers for Gold !!!
This update is dated Tuesday 6/30/2020
NIFTY closed today at a bullish level of 10302. We feel the bull rally in NIFTY in India has topped at the level 10600 which was tested last week. We repeat again that NIFTY will correct savagely over the next six months or less, on the back of global cues especially a brutal correction in ^DJIA and S & P 500. NIFTY will re-test its March 2020 low of 7511 in the said time frame. All Global Equity indices will re-test their March 2020 lows by end December 2020 if not earlier.
COVID 19 pandemic is out of control in USA, Russia, Latin America ( Brazil worst hit ), India, Iran and African Continent Countries. Globally as of date around 10.52 million people have the virus as of date and death toll is 0.51 million and counting. WHO informed today that the pandemic is far from over and is accelerating. This is an alarming statement.
The key US Equity indices closed today at bullish levels as under :
a) DJIA = 25812 ( March 2020 low – 18213 )
b) S & P 500 = 3100 ( March 2020 low - 2191 )
c) NASDAQ COMP = 10058 ( March 2020 low - 6631 )
The said indices did retrace nearly 75 % to their Pre COVID levels of February 2020 highs and NASDAQ especially breached past it’s Pre COVID levels to test high of 10221 on 6/23/2020. FAANG Stocks as mentioned in our previous updates were on fire ! The global equity markets were bullish on back $ 2.30 trillion of economic stimuli announced by US Govt and other Govts across the world also announcing huge stimuli. The money has entered the stock markets in USA and EU. We repeat these stimuli are all temporary measures. The money will run out by end July 2020 in USA and also soon for other economies in EU, Japan and UK. Vaccine is also about 12 to 15 months away from date.
In USA some States after re-opening of the economy had to roll back to containment measures. As of date in USA – fresh cases from Southern, Eastern States and other nine States, the daily count of fresh cases with infection are around 40,000. This figure will touch 50,000 fresh infected case per day in a matter of few days. The situation in USA, Brazil, Russia, Iran and India is very grave. As per Dr. Antony Fauci – if stringent measures are not enforced by the US Federal Govt in the coming few days, the daily fresh infection rate will rise to 100000 patients/day. Texas, Florida, California – situation is grave.
As per Ex-FDA Chief ( Dr. Scott Gottlieb ) – 20 million people are already infected by this COVID virus in USA as of date. These 20 million people have not been tested. This figure is nearly ten times the official figure of 2.5 million. We are not aware on what basis Dr. Gottlieb has estimated this figure of 20 million Americans having the virus ?
Investors have to save their own lives and lives of their families first from this pandemic.
Then think of profits from their investments. Hence investors have to prepare to live safe and not fall prey to this deadly virus. Having done that – you have would have made the best profits in 2020 !
The only solution now is a vaccine which we feel will be available in USA and EU by Q2 2021. If a successful vaccine is developed by end October 2020 and is distributed globally by December 2020 – it will be fantastic as death count around the globe will minimised. But if the vaccine is only available by Q2 2021 – a lot damage will be done. We cannot guess what will be the global death toll figure by end Q3 2021 ?
We have mentioned near complete exit policy in equity holdings for investors in India and around the world in our last month’s post. This virus will create havoc globally in the next 12 to 18 months. No amount of economic stimuli by Govts across the globe will help unless a successful vaccine is developed. Economic activity globally will be a small percentage as compared to Pre COVID era. Millions of people around the globe will be without jobs. People at the bottom of the pyramid will be worst hit around the globe, as there will food shortages and this strata can also be homeless. No funds to pay Rents or EMIs. This will be major issue with Govts across the world.
All the countries around the world will further announce QE measures and keep their currency printing presses running 24x7 to boost their sagging economies. This currency printing cannot go on for eternity. The value of major currencies in the world – US Dollar, Euro, JPY and GBP will be seriously “de-based” against Gold in the coming three years. The ugly head of inflation would rise and initiate a new phase of “hyperinflationary depression” in USA, not seen since 1930s ? USA is mentioned especially as it is the world’s biggest economy and the mighty US Dollar is referred to as a benchmark for other economies and their respective currencies.
We are now in firm global equity bear markets from 2020 to 2030, contrary to almost all the market analysts in the world. We repeat - the global indices have topped out in June 2020 and one will see equities globally slipping deep into bear territories in the coming 18 months or less from date. All rally’s will be phoney and will fizzle out.
This 2020 economic crisis does not have its roots in a financial domain. The roots are in medical science domain. This crisis is not a recession. This is a breakdown. This crisis is totally different and never seen since 1929 in USA. This crisis cannot be fixed by politicians and economists as per our understanding. The solution lies in science or lies in an Act of God wherein the said virus leaves our planet Earth on its own.
So please exit from equities now 100 % and be cash rich and buy physical Gold which is not stored in any bank vaults. Put your physical Gold in your safe deposits at home. HNIs can invest their physical Gold in private vaults in Switzerland or Singapore. Physical Gold will a currency till USA comes out of “hyperinflationary depression”.
Our target price of Spot Gold at US $ 1780.00 pto was tested on 6/29/2020. Our next price target of $ 1920 pto will be tested by September 2020.
Hence start getting out of equities and sit on cash. At least 50% of your funds now should be in physical Gold.
Stay safe and happy !
NIFTY closed today at a bullish level of 9580. We feel the bull rally in NIFTY in India has topped at the level 9600 which was tested today and we feel that NIFTY will correct savagely over the next six months or less, on the back of global cues especially a brutal correction in ^DJIA and S & P 500. NIFTY will re-test its March 2020 low of 7511 in the said time frame. Once this level is re-tested, we will post our updates regarding the state of Indian equities from thereon.
The key US Equity indices closed today at bullish levels as under :
a) DJIA = 25383 ( March 2020 low – 18213 )
b) S & P 500 = 3044 ( March 2020 low - 2191 )
c) NASDAQ COMP = 9490 ( March 2020 low - 6631 )
The said indices were bullish on the back of $ 2.30 trillion of economic stimuli announced by US Govt and the vaccine development euphoria. These stimuli are all temporary measures. The money will run out soon as the world’s largest economy is bleeding. In addition Vaccine euphoria will also die down in the said time frame.
The tech heavy NASDAQ was the best performer US Equity index in May 2020. We feel all the three equity indices as above have topped out and in the coming six months or earlier - US Equity markets will crash and re-test their March 2020 lows as mentioned above. Global equity markets will also correct on the back of correction in US equities.
We will post our updates once the above March 2020 levels have been breached – it could take six months or less. The next levels will then be posted. As of now we feel if March 2020 lows are re-tested, then we will see more savage corrections in said equity indices. Let us wait till the March 2020 lows are re-tested as mentioned above.
As we have mentioned above – we are now revising our commentary for the global equity markets from June 2020 onwards. We are now advocating near complete exit from equity holdings for investors in India and around the Globe.
please exit from equities now 100 % and be cash rich and buy
physical Gold which is not stored in any bank vaults.
This update is dated Friday – 4/30/2020
The COVID 19 virus is showing no signs of it being mitigated by higher temperatures ( in excess of 40 deg celcius ) in the Asian and Arican continents. USA, UK and EU are very seriously hit by this pandemic with record number of infections and deaths. The curve is flattening in the developed world but is on a parabole in India, Asia and Africa. All the astrologers and pundits have been proven wrong that this virus will cease to exist on planet earth by end April 2020 !
We mentioned in our last post that we do not agree with this end April hypothesis and nor do we agree with the end September 2020 hypothesis that this virus will be contained. We still stick to our estimates that an effective COVID 19 virus vaccine is about 18 to 24 months away – hopefully by q2 or q3 2021. All these efforts of Remdisivir and other tweaked retroviral drugs are not magic bullets to win over the virus which has hit economies all over the world. These are not vaccines. These are drugs to be given to critically ill Corona virus patients to save their lives. Vaccine is the only panacea !
We feel the target date of September or October 2020 for a successful vaccine development by Oxford University, UK and M/s BioTech GmbH, Germany is too ambitious. We are not hopeful of this timeframe.
Global Equity Indices have retraced about 21 to 36% from their respective lows of March 2020. We could not anticipate the velocity of this pull back in global indices especially in US Equities - ^DJIA and S & P 500. Also pull back was very sharp in the Indian Equity's Market. Almost a vertical spike from March 2020 lows !
The pull back rally was very very sharp on the basis of huge stimuli being announced by Govts in USA, Japan and EU. Second trigger for the recovery in Global Equity Markets was the possible success of drugs like Remdisvir, BCG and Polio Vaccine etc which turned out to be damp squids. The rally started fizzling out today globally.
A whopping virus stimulus package was approved in America by US Congress in early April 2020 under the CARES Act 2020 for a staggering amount of US $ 2.00 trillion. This is basically “helicopter bazooka money” and is whopping 9.26 % of the US GDP of $ 21.6 trillion as of end 2019. These funds are being pumped into the sinking US economy in various sectors of US economy – never heard of before in previous economic crisis in USA. Details of this complex $ 2.00 trillion largesse is mentioned on the website of US Govt. Total unemployment has hit 30 % in USA. Total US Debt will rise to astronomic levels by end June 2020. Total US Fed Debt was $ 23.40 trillion as of 12/31/2019. Debt to GDP ratio in USA was 108.3% as of end 2019. Now the additional Debt of about US 2.00 trillion (assumed 100% is the fiscal part of total stimulus of US $ 2.00 trillion ) will make figures look more ugly. US GDP contracted by 4.8% (annualized basis) in q1 2020. The GDP contraction will be in excess of 5.3 % by end q2 2020. The US Debt to GDP ratio will hit around 124 % by end June 2020. This is based on estimated total US Debt of US $ 25.4 trillion and GDP of US $ 20.00 trillion by end June 2020.
The total US Debt is capped at US $22.25 trillion but the US Congress has raised this to $ 25.40 trillion. No one is mentioning about the issue - Total US Debt Ceiling Limit has already breached of US $ 22.25 trillion cap after US Congress passed the complex US $ 2.00 trillion for virus assistance – CARES Act. Maybe we need to be corrected on our figures of current total US Debt at $ 25.4 trillion. We repeat - maybe we need to be corrected on our figures of current total US Debt at $ 25.4 trillion.
US Fed can get out of this crisis temporarily ( as in the past decades ) by printing US Dollars, Floating Sovereign Bonds, e- Dollars etc. It should be noted that this debt ceiling raise has repercussions on AAA rating of US Treasuries & Bonds.
The Japanese Govt announced a massive stimulus of approx. $ 1.00 trillion ( equivalent JPY ). This is whopping 20 % of Japanese GDP. China is in the similar range plus monetary stimulus. Indian stimuli for the pandemic is only at US $ 60.00 billion – which is only 2.07 % of its GDP ( nominal $ 2.90 trillion ). Even Malaysia and Singapore are ahead of India at around 12 %.
India cannot afford a higher allocation for Virus Stimulus in excess of US $ 60 billion because of a fear of the Sovereign Downgrade by rating agencies – FITCH, MOODY’s etc. Indian fiscal deficit has already breached its target at 3.5 % of its projected GDP as of FY2021. On the monetary front RBI slashed Reverse Repo Rate for ADs by 25 bpts to 3.75 % - thereby discouraging ADs not to park their excess liquidity with RBI. RBI wants ADs to lend to Indian Companies. Indian Corporate Bond markets were almost ill-liquid after the Franklin Templeton Debt MFs collapse in India in April 2020. RBI moved in to inject excess liquidity into the Indian Financial Sector so as to calm the Indian Corporate Debt Bonds market.
Hence as regards Global Equities including India – we are bearish till end q3 2020 on account of virus pandemic. In May and June 2020 we feel global GDPs will shrink, unemployment figures will rise, virus pandemic will not be contained, poor countries will need IMF bailouts, famine in poor countries etc. We repeat will post our comments when March 2020 lows are breached – we estimate within end June 2020.
A couple of earlier risks have still not been mitigated which will add fuel to the fire when the global equities further correct in May through June 2020 :
a) The US Sovereign Bonds ”Yield Curve” is still inverted between the 2Y and 5Y Bonds. This had already suggested a looming recession in USA in q4 2019
b) Trade wars between China and USA is heating up again after virus pandemic spread globally. USA is blaming China not doing enough in tango with WHO regarding ground situation in Wuhan. USA is also blaming China that it did not share the details of the virus outbreak with USA in November through December 2019. Chinese Govt has refused physical inspection of its facilities in Wuhan and other Sites by team of experts from USA. There are some conspiracy theories going around in USA that the virus is man made by Chinese virologists in laboratories in Chinese. This virus was not spread by bats and pangolins to humans in the China. US Administration wants China come out clean on this origin of the virus failing which China has to pay a huge fine. US Administration is also threatening the Chinese that it will cancel its debt obligations. China golds US Treasuries and Bonds worth us $ 1.12 trillion. US Administration is threatening it will default wilfully on its Chinese Debt of US $ 1.12 trillion. This is an extreme step being proposed by US Administration but the Americans will never do it as the US Bond Markets will crash and other countries holding US Foreign Debt ( around US $ 5.70 trillion ) might start dumping US Bonds. Prices of US Bonds will crash and yields will soar to double digit levels from current sub 1.0% level yields. Hyperinflation ? This US $ 1.12 trillion – US Administration can raise by increasing import tariffs on exports of Chinese goods to USA. US Administration is also planning to block US Pension Funds to invest around US $ 100 billion in Chinese Debt Markets. Please do not underestimate the Chinese. If they are pushed against the Great Wall – they can pull the “Nuclear Button” and start dumping US Treasuries & Bonds in global markets. This will create a havoc in the US financial markets. But we do not rule out this event in the years to come !
Crude Oil – BRENT Crude Oil July futures tested a price of US $ 15.99 pbbl at ICE London on 4/22/2020. This is a 20 year low for BRENT Crude Oil. BRENT closed at US $ 26.44 pbbl July 2020 Futures at ICE at close today 4/30/2020. Global Crude Oil market is oversupplied and hence we saw a carnage in BRENT and WTI Futures in last week of April 2020. We are not mentioning details of WTI as we do not track the same as this Crude Oil is more USA centric. But we all know WTI May 2020 Futures tested minus 40.23 pbbl on 4/21/2020 – lowest in the history of CME since WTI was traded at Chicago. BRENT Crude Oil prices can trade in the US $ 18.00 to 20.00 pbbl territory in the coming two months. Demand destruction is about 30 mbpd on account of virus pandemic to levels of about 60 mbpd. The production cuts by 10 mbpd by OPEC++ will be insufficient from 90 mbpd production in January 2020.
At these low Crude Oil prices globally some poor Oil exports nations like Nigeria may have a Sovereign Default and will need IMF bailout. Iran and some other crude oil exporting countries may need a bailout ?
Gold Spot NY tested US $ 1750+ pto in April 202 0. Our next target of US $ 1780.00 pto will be tested within end June 2020.
We advise Global and Indian investors to trim their exposure to equities to only 25 %. Invest at lower levels in Pharma and Bio-Pharma Companies, Vaccine producers viz – PFIZER, GSK, SANOFI etc. Indian Stocks - BHARTI AIRTEL, BEL, BEML, HAL, ASTROMICRO, L&T, ULTRATECH CEMENT and TATA POWER are some of our best bets for the next 5 to 10 years investment scenario. Please consult your CFO before you make investments in the above stocks at levels of NIFTY below 7500.
Balance be liquid with 25 % and 50% one can even buy physical Gold at current levels of US $ 1700+ pto – although a bit expensive. We repeat physical Gold will give investors best rate of returns from date till 2025-2030. No other asset class in the world will give you returns as compared to physical Gold from date to 2025. Yes if investors missed the boat at $ 1350 pto levels – this elevated level of US $ 1700+ pto is also good for a fresh entry in physical Gold. We are talking about prices of $ 4500 to 6000 pto in 2025 through 2030.
Happy investing ! Stay indoors till lock downs are lifted !
This update is dated today i.e. 3/31/2020 – Tuesday. On Saturday 3/21/2020 – Govt of India announced a nationwide curfew in India for Sunday – 3/22/2020. This was extended to a complete lockdown of the Indian economy w.e.f. 3/23/2020 to 4/14/2020 to contain COVID-19 spread nationwide. Complete shutdown of the Indian economy barring essential services. So we are all at home till 4/1/4/2020 !
This update covers week number thirteen of calendar 2020 and two days of March 2020 – 3/30 and 3/31/2020 for the analysis of benchmark global indices. Brief synopsis is as under :
a) In the above seven trading days – Central Banks and Governments of almost all the important countries announced massive Fiscal and Monetary policy incentives. On 3/23/2020 – NIFTY in India crashed to a 4 year low of 7583 but closed at 7610 down 1135 pts or down 12.8 %. This is the single largest daily fall in percentage terms for NIFTY in its history. BSE SENSEX too followed suits and tested a 4 year low of 25580 to close at 25981 – down 3934 pts or down 13.15 %. India’s Central Bank ( RBI ) and Ministry of Finance arrived with two fire engines to douse the fires during trading hours on 3/24/2020. NIFTY early morning had tested a fresh 4 year low of 7511. Late afternoon - RBI cut Repo Rates by whopping 75 pts to 4.40 % and cut Reverse Repo Rates by 90 bpts to 4.00 %. CRR Rate was cut by 100 bpts to 3.00 %. MoF – Govt of India announced an economic stimulus of US $ 23.20 billion ( in equivalent INR ) and a US $ 800 million ( in equivalent INR ) package for relief for the poorest of the poor daily wages workers in India. NIFTY rallied smartly from the 4 year low of 7511 on 3/24/2020 to whopping high of 8598 at close of today. Up nearly 15 % from the lows as above. NIFTY has staged a smart recovery in seven trading days after testing multi year lows on back of global cues and aggressive intervention by RBI and MoF to provide relief as per above. Govt of India is not bothered about increased fiscal deficit and wishes to contain the COVID-19 aftermath manifestations.
b) Similarly on 3/23/2020 - ^DJIA crashed to its 4 year low of 18213, S & P tested fresh 4 year low of 2191 and NASDAQ tested its fresh 52 week low of 6631. On 3/24/2020 – US Govt announced a US $ 2.20 trillion economic stimulus package to bail out struggling US Companies which need capital injection failing which they will go out of business. Businesses in the Airline, Leisure & Travel and Hotel etc. Modalities not announced – Loans or Equity stake purchase. ^DJIA pole vaulted from the above low to close today at 21917. Up whopping 20 %. S & P closed today at 2584. Up nearly 18 % from the low as above. NASDAQ COMP is the only benchmark index which still has not breached its December 2018 low 6191. It closed today at 7700. Up nearly 16 % from low as above. ^DJIA rallied by huge 11.37 % on 3/24/2020 at close – its biggest daily gain in percentage terms since 1933. This kind of intervention by US Fed and Treasury is unprecedented in the history of United States of America. TARP in 2008-09 was around US $ 800.00 billion. But with all these efforts - ^DJIA had its worst week since 1933. ^DJIA was down 16.37 % in week 13 of calendar 2020. Volatility is very high in ^DJIA. The need of the hour to keep America running even if it means keep its printing presses running 24x7 to print US $. The US Administration knows the perils of printing US $ worth trillions without keeping any physical Gold as collateral. This headache Nixon fixed for the US Fed on 15th August 1971 !
c) Rest all benchmark Asian and European Equity indices did not breach their lows of week 12 of calendar 2020. All respective Central Banks resorted to interest rate cuts and announced economic stimuli to save the companies operating in the Sectors as mentioned above. Week 12 lows of equity indices we track will be breached in April 2020.
Now we have to see what is in store for the global financial markets till June 2020 and then from June 2020 to December 2020 in context of COVID-19. This virus has created havoc since we posted our last update. USA, UK, Spain, Italy, France and UK are very seriously hit by COVID-19 fresh infections and soaring body counts. Lockdowns are not getting the desired results. The PPE and Ventilators are in serious short supply. Doctors and Nurses have died all across these countries. COVID-19 has not been effectively contained by health authorities in these developed countries. Iran is also in the same boat but we do not get the right figures from this Islamic Republic. What about COVID-19 spreading to the African Continent ? Can one fathom what will happen in these poor African Nations which have very weak health infrastructure ? Millions will die in Africa if COVID-19 spreads to all the countries ?
China has done a miraculous job of containing the dreaded COVID-19. China is an authoritarian State and hence could implement lockdowns very seriously in Wuhan. They protected Shanghai and Beijing very effectively by not allowing any international flights to land directly at these international airports since late February 2020. All international flights were to smaller airports nearby and all arriving passengers were placed in quarantine for 14 days and screened 100 %. Those found infected were treated. I have a hunch that Chinese have some anti-dote with them for COVID-19 which was transmitted by Bats to Rabbits, Reptiles or Snakes. From Rabbits or Snakes the virus infected humans in Wuhan. Chinese are opening Wuhan slowly. Also easing curbs in Beijing and Shanghai. Factories are returning to normal. Whereas in the rest of the world all factories and commercial activities as shut. What is going on ? The puzzle has parts which do not fit properly to assemble a correct picture !
There are a lot of renowned analysts around the globe who are giving their opinions about the future of Equity, Sovereign Bond and Debt instruments. The problem this time is not financial like in 2008. In 2008-09 cash was pumped in by Governments and businesses were partially nationalized, merged, restructured etc. This time the problem is not financial but medical. Only Science has a solution by way of Antibodies administration to the COVID-19 infected patients or Vaccine development. Doctors in the developing world including India are giving a combination of – Chloroquine / Hydroxychloroquine + Antiretroviral drugs to COVID-19 infected patients. But this is not a permanent way to cure a viral infection. We need a vaccine to treat COVID-19.
March 2020 – the equity markets have performed worse than in the month of September 2008 on a monthly basis. US Equity markets have performed worst in Q1 2020 in terms of percentage falls since the Great Depression. These are very serious matters and analysts are predicting all will be back to normal by September 2020 as vaccines will be in place by August 2020. Some astrologers are predicting all will be in control without a vaccine by April 2020 . COVID-19 will vanish completely by April 2020 on its own due to high temperatures. We cannot say with 100 % certainty.
We feel that global equity markets we track will breach week 12 lows and fresh lows as above for NIFTY, ^DJIA, S&P and NASDAQ COMP in April 2020. COVID-19 will not be contained.
The genetic code of COVID-19 has been discovered and analysed by a few global vaccine manufacturers as of date. The trials will be over by September 2020 and the vaccine will be ready by early 2021. Vaccine development is not measured in time frame of months but years. Rotavirus vaccine was ready after eight years of its genetic code discovery.
I am very very bearish on the global Equities, US Sovereign Bonds, US Dollar Index from date till end 2020 as I do not feel COVID-19 will completely vanish by end April or end September 2020. Due regards to astrologers - Kuntz, Celeste Browne, Subbiah etc. This will not happen.
We are entering a phase in USA where situation will be like 1929-32. The effects will be felt globally. We do not agree with United Nations recent report that China and India will be the beast performing economies in the years to come because both have successfully contained the spread of COVID-19. China may have an anti-dote to this COVID-19 virus but what is the guarantee that a second wave will not hit China ? China has opened it “wet meat” markets for Dogs, Bats and Pangolins in a few Provinces. In India COVID-19 will explode like USA, Italy and Spain in the coming months.
We have entered a long term bear market for global Equities, US Sovereign Bonds and US Dollar. US Bond markets will crash once Chinese “press the nuclear button” and start offloading US Bonds worth 1.5 trillion. Chinese will start dumping US Bonds in Q3 2020 onwards. Cash and physical Gold will be the king !
We predict a global equity meltdown within December 2020. We predict US Bond Market crash within December 2020. Post these events – global equity markets too will crash. US Dollar will be seriously debased as trillions of Dollars will be printed with any physical Gold being kept as a collateral. We feel global equity markets and US Bond markets will be shut for trading in Q4 2020. We predict this bear market could extend to 2025-2030. Bear markets do not end in months.
Let us first see what happens to COVID-19 in April 2020 ? Will it completely vanish from the planet earth by April 2020 ?
Crude Oil was battered in the past seven trading sessions. BRENT Crude Oil May 2020 futures tested a 18 year of US $ 24.12 pbbl. American Shale Oil industry will shut soon as they need a price in excess of US $ 50.00 pbbl. Russian economy can collapse as they also need a base price of US $ 60.00 pbbl for new wells. Saudis need a price of US $ 80.00 pbbl to balance their annual budget. But these are wishful numbers. Even if Trump and Putin agree to be partners – one will not see prices in excess of US $ 40.00 pbbl. I am convinced that we will see a price of US $ 20.00 pbbl for BRENT Crude Oil within December 2020.
Physical Gold target is US $ 2400 pto for December 2020 as mentioned in our last post.
We are posting yet again a special update dated today – 3/20/2020 Friday. Prime reason is that all global equities except ^SSE COMPOSITE China and ^IXIC NASDAQ COMPOSITE USA have now broken their December 2018 lows. Some key global equity indices are trading below the December 2018 lows. Details are presented as under in this update.
What next now in the coming weeks or months ? Where do global Equity Indices go from closing levels of today ?
Please refer to our Special Update dated 3/13/2020 with reference to COVID-19.
COVID-19 pandemic is showing no signs of being contained worldwide except China from where it originated. China has reported a handful of fresh infected cases outside of Hubei province. But data from China is not reliable. We cannot say with certainty that China has only a few fresh cases in the past couple of days of COVID-19. Chinese Ministry of Health has declared that there have been no fresh infections in Hubei province since the past three days. We do not believe Chinese Govt claims.
COVID-19 is creating havoc in Iran, Italy, Spain, France and USA. Netherlands and Belgium have reported first deaths. The situation is really bad in Italy and Iran. Record number of deaths, record number of fresh cases, shortage of medical staff, deaths of medical staff, extreme shortage of medical supplies, extreme shortage of ICU Beds and Ventilators. Lockdowns have been announced in four states in the United States and in some parts of EU. Italy is under total lockdown.
All the measures mentioned in our last update by governments all over the world have been put into action very aggressively - Liquidity injections ( Bonds and CP purchase ), Fiscal stimuli ( Tax breaks for both Corporates and Individuals ), Cut in Interest rates, Corporate bailouts, Hard Cash dole outs etc. Global equities continue to fall on account of COVID-19 crisis.
Crude Oil – BRENT Crude May 2020 Futures crashed to US $ 24.97 pbbl on 3/19/2020, lowest level since the year 2001 ? BRENT Crude is in deep bear territory. We are not in a position to predict Crude prices as suddenly one can see Russians and Saudis agreeing to sleep together and cut production aggressively respectively. Some Crude Oil pundits are predicting prices of BRENT Crude to be in the band of US $ 15.00 to 20.00 pbbl by June 2020. This can only happen if Saudis and Russians are not bed partners.
Spot Gold prices corrected further as predicted in our last update. Spot Gold tested a whopping low of US $ 1440.00 pto on 3/16/2020 in New York. Gold Spot NY closed today at US $ 1500 pto levels. We feel the worst is over in Gold. Gold will explode back to $ 1650 - $ 1780 - $ 1920 - $ 2400 pto levels from April through December 2020.
Please note that our predictions on a few global equity indices as under :
1. ^NSEI NIFTY India : October 2018 low of 10005 has been breached as predicted. Even the all-important level of 9300 has been breached. NIFTY crashed to fresh new 52 week low of 7832 on 3/19/2020. It closed today at a level of 8745 level. From the yearly high of 12430 to low of 7832 – NIFTY is down nearly 37 % from its peak. BSE SENSEX is also down by nearly 37 % from its peak of 42274. FIIs have been heavy sellers in Indian and Emerging Market’s Equities and Bonds and putting funds in safe haven - US Sovereign Bonds and US Dollar. Yields on US $ Sovereign Bonds tested life time lows !
The key supports of S1 8624 S2 8555 were breached within this week. NIFTY is in deep bear territory. The next support and resistance levels are S1 7830 S2 7500 S3 6300 S4 6215 R1 9300 R2 10005 R3 10500 till June 2020 or earlier
2. ^N225 Japan : December 2018 low of 19084 has been breached. It tested a fresh multi year low of 16358 on 3/19/2020 and closed today slightly higher at 16552. This index is also now in deep bear territory. S1 16690 was breached. ^N225 is down 32 % from its peak of 16552. ^N225 can test a level of 12000 within June 2020 or earlier
3. ^HSI Hong Kong : October 2018 low of 25125 has been breached. ^HSI tested a fresh multi year low of 21139 on 3/19/2020 and closed today at 22805. ^HSI is now in deep bear territory. S1 22519 was breached. ^HSI is down 30 % from its peak of 30280. ^HSI can test a level of 15140 within June 2020 if not earlier
4. ^TWII Taiwan : October 2018 was 9400 finally breached on 3/19/2020 and ^TWII crashed to a multi year low of 8523. It closed today at 9234. This index is also now trading in bear territory and is down nearly 30 % from its peak of 12198. S3 9400 was breached. ^TWII can test a level of 6100 within June 2020 if not earlier.
5. KS11 KOSPI South Korea : October 2018 low of 1986 has been breached. KOSPI crashed to a multi year low of 1439 on 3/19/2020. It closed today at a very bearish level of 1566. KOSPI is down 37 % from its peak of 2277. KOSPI is deep in bear territory. S1 1680 was breached. KOSPI can test 1138 within June 2020 if not earlier.
6. ^SSE COMP China : October 2018 low of 2449 still has not been beached. ^SSE COMP tested a fresh 52 week low of 2646 on 3/19/2020. It closed today at 2745. ^SSE COMP is down nearly 20 % from its peak of 3288. S1 2685 was breached. ^SSE COMP can test 2449 or even 2300 within June 2020 if not earlier. It is a most resilient equity index in Asia.
On 3/16/2020 – these major EU Equity indices crashed to test fresh their 52 week or multi year lows. COVID-19 is creating havoc in Italy.
7. ^GDAXI DAX Germany : December 2018 low of 10800 has been breached. DAX crashed to its fresh 52 week low of 8255 and closed today at 8928. DAX is deep in bear territory and it is down nearly 40 % from its peak of 13795. S1 9060 was breached. DAX can test a level of 6900 within June 2020 or earlier.
8. ^FCHI CAC 40 France : December 2018 low of 4615 has been breached. It crashed to its fresh 52 week low of 3632 and closed today at 4118. CAC is in deep bear territory and its down nearly 40 % from its peak of 6111. S1 4025 was breached. CAC 40 can test a level of 3055 within June 2020 or earlier.
9. ^FTSE 100 UK : December 2018 low of 6592 has been breached. ^FTSE crashed to its fresh 52 week low of 4898 and closed today at 5190. This index too is in bear territory and is nearly 32% down from its peak of 7227. ^FTSE can test a level of 3615 within June 2020 or earlier
10. ^IBEX Spain : December 2018 low of 8286 has been breached. ^IBEX crashed to a multi year low of 5184 and closed today at 6443. This index too is trading in very deep bear territory with ^IBEX down nearly 49 % from its peak of 10100. S1 6347 was breached. ^IBEX can test a level of 5050 or even 4040 within June 2020 or earlier.
11. ^FTSE MIB Italy : December 2018 low of 18152 has been breached. This Italian benchmark equity index crashed to a multi year low of 14153 and closed today at 15732. ^FTSE MIB is trading deep in bear territory and is off 36 % from its peak of 22166. It can test a level 11100 within June 2020 or earlier.
American equity indices were bearish in this week 12 period of March 2020. Twice there was a trading halt ( down 7 % ) in ^DJIA in the said period.
12. ^DJIA USA : December 2018 low of 21712 has been. ^DJIA tested a fresh 52 week low of 18917 and closed today at 19174. ^DJIA corrected to a low 20116 on 3/16/2020 and was down by 2997 pts ( - 12.3 % ) on a daily basis. This was the single largest daily fall in ^DJIA in absolute terms and percentage terms since October 1987. In this period US Fed cut key interest rates by another 100 basis points and with this cut - The US Fed Funds interest rates are near zero percent. Plus further QE of US $ 1.00 trillion including US Commercial Paper. There was a sharp pull back in ^DJIA but this rally was sold into. COVID-19 is spreading fast in USA. New York and three other States in USA are under total lockdown. There are acute shortages of Medical supplies, ICU Beds, Doctors and Nurses in USA. Testing Kits are also in short supply. USA it seems is behind the curve by two weeks as per health experts. The flight bans should have been implemented two weeks back. Testing should have been more comprehensive. USA is struggling like Italy to fight COVID-19.
US Dollar Index tested new highs of 102+ and 10Y benchmark yield tested a record low of only 0.311 bpts on 3/18/2020
^DJIA is now trading in bear territory and its off by nearly 36 % from its peak of 29568. ^DJIA can test a level of 14800 within June 2020 or earlier. Trading curbs could be in place shortly and maybe trading could be suspended in US Equity markets if this level is tested.
13. ^GSPC S & P 500 USA : December 2018 low of 2347 was finally breached. S & P 500 tested a fresh 52 week low of 2280 and closed today at 2305. This index too is trading in bear territory and is nearly 33 % down from its peak of 3393. S & P 500 could test a level of 1696 within June 2020 or earlier.
14. ^IXIC NASDAQ COMP : December 2018 low of 6193 has still not been breached. NASDAQ tested a new 52 week low 6686 and closed today at 6880. This index is also now trading in bear territory and is off by nearly 32 % from its peak of 9836. NASDAQ COMP will breach 6193 and may test a level of 5000 within June 2020 or earlier.
Trading curbs could be in place in global equity markets in the near short term and if the above levels are tested – then trading could be suspended globally.
Investors as advised to stay away from Equities till further advised as COVID-19 is creating havoc globally. Investors can buy physical Gold
This is a special post dated 3/13/2020 Friday as certain predicted levels of global indices have been breached in Q1 2020 itself after WHO declared COVID-19 virus outbreak as global pandemic as EU counties, USA and Iran reported large number of cases. In EU – Italy followed by Spain are very badly hit. In Asia – South Korea is the worst hit. India as of now has only a few hundred cases.
We were spot on regarding massive correction in global equities led by ^DJIA in March 2020. This correction will spill over into Q2 2020 as predicted in our last month’s post. Global equities corrected in first two weeks of March 2020 led by ^DJIA. But a few global equities corrected much more than ^DJIA in percentage terms in the first two weeks of March 2020. Week 11 of 2020 ( 9th to 13th March 2020 ) was historic as global equities indices cracked in this week and tested multi-year lows. In fact major EU equity indices fell the most in percentage terms in their history.
Crude Oil and Gold also tested multi-year lows. Investors were reminded of global equity crashes of the years of 1987, 1991, 2001, 2008, 2018 which we have been through. Details are posted as under in this post.
We have been saying since the past 12 to 15 months that global equities will correct by 25 to 35 %. We mentioned that the said correction will be led by ^DJIA and other global equities will follow suit. We mentioned this again in our January 2020 update that ^DJIA will correct by 25 to 35 % in Q1 and Q2 2020. The said corrections were based on our proprietary tools which include Astro inputs. Anyway we were BINGO !
We feel the ten year ( 2009-2019 ) dream bull run of equities is over and we are in for a bear phase in equities from date till 2025.
This update is being posted specially as some important levels of global equities have been breached convincingly and we feel that the correction will further spill over into April through June 2020. Prime reason is the impact of COVID-19 virus globally going ahead till June 2020. No one knows that with the onset summer globally, will the impact of the COVID-19 virus will taper off due to temperatures exceeding 30 deg Celsius or not ? In the past viruses of this family in Asia have been decimated on account of high temperature. Scientists globally hope that COVID-19 will also not survive June 2020 temperatures globally and this pandemic will be over. If this in fact happens – there will be a massive rally in global equities led again by ^DJIA in Q3 2020 ( July – August 2020 )
But by June 2020 if the COVID-19 does not respond to higher temperatures then the global equities will correct till Q4 2020. The reason is that the first COVID 19 vaccine will be ready for final human administration by April – June 2021 if not later. Markets discount the future so a rally will start by early 2021, if there are positive developments on the vaccine front. Very tricky months ahead for global Equities, Crude oil and Gold. We do not track other commodities.
There could be very savage pull backs in global equities in March- June 2020 on account of Government interventions around the globe in their respective economies by way of – Liquidity injections, Fiscal stimuli, Cut in Interest rates, Hard Cash dole outs and other measures. But all these rallies will be sold into. Hence please stay away from global equities till June 2020.
We will review the situation in June 2020 or earlier as per the situation.
Crude Oil – we mentioned in our last month’s post that it is very difficult to predict crude oil prices on account of Saudis and Russians. Exactly the same happened. In early March 2020 in the OPEC+ met in Vienna – Russians did not agree to sleep with Saudis and did not agree for production cuts. Saudis were shell shocked and decided to chug along solo. BRENT Crude May 2020 Futures crashed to US $ 31.18 pbbl on 3/9/2020 – down by nearly 30 % in a day. Worst daily fall since January 1991 ?
BRENT May 2020 Futures closed today marginally higher at US $ 33.72 pbbl. Now we are pretty sure that till Russians agree to production cuts – BRENT Crude Oil prices will be in the range of US $ 28.00 to US $30.00 pbbl due to sluggish global demand on account of global economic slowdown.
Spot Gold prices corrected to as predicted to US $ 1504 pto levels after testing US $ 1690 pto levels in early March 2020. Gold prices can correct further to US $ 1450 levels in March 2020 due to liquidity issues as investors booked profits in their Gold holdings to pay for their massive losses in equity markets ! But remember will Gold will explode back to $ 1650 - $ 1780 - $ 1920 - $ 2400 pto levels from April through December 2020.
Please note that our predictions on a few global equity indices as under :
1. ^NSEI NIFTY India : October 2018 low was 10005 was breached as predicted. Even the all-important level of 9300 level was breached today – but on an intra-day basis. NIFTY and SENSEX crashed in early morning trade today by 10 % to hit the first daily down circuit limit. This was for the first time since 2008. Trading was on halt for thirty minutes. NIFTY crashed to 8624 levels – down 966 pts and SENSEX crashed to 29684 level – down 3090 pts. These are the single largest daily falls for both these Indian Equity indices in absolute terms. Post resumption of trading after the cooling period - the Indian Equity markets fell further but for a brief period and NIFTY tested a fresh intra-day low of 8555 and SENSEX tested 29388. The next 5 % down circuit level was not tested and NIFTY closed at a slightly bullish level of 9955. Global equity markets including Indian markets are in a highly “over sold” territory and a relief rally is expected but the same will be short lived. Traders have to be very nimble footed as markets as very volatile in India and around the Globe.
It is of paramount importance that NIFTY sustains level the important support level of 9300 on closing basis for at least five trading days in a row. If for whatever reason NIFTY cannot sustain – then the next S1 8624 S2 8555. R1 10005 R2 10500
2. ^N225 Japan : December 2018 low was 19084 and was breached as predicted but the time frame was shorter ! Savage correction in Asian Equities led by KOSPI in South Korea. ^N225 tested a multi-year intra day low of 16690 today but closed slightly higher at a very bearish level of 17431. This index is now confirmed to be in deep bear territory. The next major support for this index is S1 16690 R1 19890
3. ^HSI Hong Kong : October 2018 low was 25125
was breached and so was 24900 breached as predicted but in a
much shorter time frame ! ^HSI tested a fresh yearly low of
22519 today but closed at 24032. Even this index is very close
to entering bear territory. S1 22519 R1 24224.
4. ^TWII Taiwan : October 2018 low was 9400. Predicted level of 10180 was breached as predicted. We predict 9400 level will be breached in Q2 2020. This index tested a fresh yearly low of 9636 on an intra-day basis but closed at 10128. This index is also close to its bear territory. S1 9760 S2 9636 S3 9400. R1 10360
5. KS11 KOSPI South Korea : October 2018 low was 1986 was breached as predicted. As mentioned KOSPI is one of the weakest equity indices in the world due COVID-18 and other reasons. It crashed to an intra-day low of 1680 which is also it’s fresh year low but closed at 1771. KOSPI is deep in bear territory. S1 1680. R1 1800 R2 1820
6. ^SSE COMP China : October 2018 low was 2449
was not breached. This index showed resilience which is beyond
our understanding. May PBoC or its proxies were supporting this
most important equity index in Asia. It tested a low of 2800 and
closed today at 2887. It did not breach its existing 52 week low
of 2685. S1 2685 R1 2900
On 3/12/2020 – these major EU Equity indices suffered their worst daily loss in their history in percentage terms. COVID-19 creating havoc in Italy and spreading fast in Spain :
7. ^GDAXI DAX Germany : December 2018 low of 10800 was breached in a shorter time frame than predicted. It crashed to a low of 9064 but closed today at 9232. DAX is deep in bear territory. S1 9060 R1 11000
8. ^FCHI CAC 40 France : December 2018 low of 4615 was breached in a shorter time frame than predicted. It tested a low of 4025 and closed today at 4118. CAC is in deep bear territory. S1 4025 R1 4800
9. ^FTSE 100 UK : December 2018 low of 6592 was breached. FTSE tested a low of 5237 and closed today at 5366. This index too is in very deep bear territory. S1 5237 R1 6180
10. ^IBEX Spain : December 2018 low of 8286 was breached. It tested a low of 6347 and closed today at 6629. This index too is in very deep bear territory. S1 6347 R1 8080
11. ^FTSE MIB Italy : December 2018 low of 18152 was breached. This index is the weakest equity index in EU. It tested a low of 14984 – down 17 % on a daily basis on 3/12/2020. This is the single largest drop in percentage terms in the history of MIB. It closed today at 15954. MIB is deep in bear territory. S1 14984 R1 17730
American Equity indices were very volatile in this two week period in March 2020. Twice there was a trading halt ( down 10 % ) in ^DJIA in the said period.
12. ^DJIA USA : December 2018 low of 21712 was breached. It tested a low of 21154 and closed today at 23186. DJIA corrected to 21154 on 3/12/2020 and was down by 2352 pts on a daily basis. This was the single largest daily fall in DJIA in absolute terms since October 1987. We were reminded of - Black Monday of October 1987 ! In this period US Fed cut key interest rates by 50 basis points and decided to buy US Bonds to the tune of US $ 1.50 trillion. This caused the DJIA to rally by 1985 pts on 3/13/2020 – single largest daily increase in DJIA on a daily basis since 2008 in absolute terms. In the same week such wild movements in DJIA. This benchmark index is trading close to its bear territory. S1 21154 R1 23655
13. ^GSPC S & P 500 USA : December 2018 low of 2347 was not breached. It tested a low of 2478 on 3/12/2020 and closed today at 2711. This index too is trading close to its bear territory. S1 2478 S2 2347 R1 2752
14. ^IXIC NASDAQ COMP : December 2018 low of 6193 was not breached. It tested a low of 7194 on 3/12/2020 and closed today at 7875. This index is too trading close to its bear territory. S1 7194 S2 6890 S3 6193 R1 7930
Investors as advised to stay away from
Equities till further advised as COVID-19 is creating havoc
globally. Investors can buy physical Gold.
The week ended 28th February 2020 was a horror show for global equities with very sharp cuts. It reminded us of September 2008 when Lehman crisis hit US equity markets and later global equity markets. COVID – 19 which started in China is now on the radar of WHO as it is spreading across all the continents on earth.
We were bearish for global equity markets including India in Q2 2020 as mentioned in our January 2020 post. The COVID-19 virus outbreak starting from China and spreading all across the globe spiked the global equity markets in February itself. Gold spiked and Crude Oil tanked in February on account of safe haven status and doomed global demand respectively.
As per our understanding COVID-19 virus should be contained in the next 12 to 18 months as Big Pharma globally will develop a vaccine in this time frame. But the problem is that till the time a successful vaccine is developed – the virus could cause more damage globally. People who have the virus and who will be infected further due to “community spread” run the risk of fatalities till the vaccine is developed. These kind of “Black Swan” events occur once in a few decades.
COVID-19 as of date has the signs of being declared a global pandemic by WHO. This will have serious global health and economic implications. Poor countries in Africa and South Asia do not have the infrastructure to handle a virus epidemic like COVID – 19. This will be a very big challenge for the health authorities in these poor countries. Some other developing countries also have poor hygiene conditions and will not be able to contain the spread of virus.
The fears of global economic implications have already manifested in February 2020 itself by way of global equities correcting. Commodities which China imports have also seen corrections. In other parts of the world – supply chains have been disrupted, which is leading to factories being shut globally as Chinese factories are shutting. Due to this fear of further disruptions – global equity markets can correct further till the spread of virus is contained globally.
The global equity markets in 2020 will correct not only account the said virus outbreak but due to already existing issues – global recession fears, unsustainable global debt, inverted US yield curve and fears of banking crisis in EU. COVID-19 was a trigger from nowhere.
Crude Oil prices will correct further on account global economic slowdown. We are not in a position to predict the Crude Oil prices from date to next 12 to 18 months. If Russians decide to sleep with Saudis – production cuts could be severe. At current levels of BRENT at US $ 50.00 pbbl – the US Shale Oil producers start to lose money. US may not be able to export Crude Oil if frackers are forced to shut operations. Hence we are not in a position to correctly predict the prices of Crude Oil for the balance months of 2020. Based on fundamentals - BRENT crude oil prices could test US $ 45.00 ppbl or lower in the next 12 to 18 months.
Gold raced past our target of US $ 1650 pto on 26th February 2020 and tested a high of US $ 1689.00 Spot. It closed however lower on Friday 28th February at US 1586.50 pto Spot. Gold could correct further in Q1 2020 but we are extremely bullish on Gold till end 2020. Gold will see levels as mentioned in our January 2020 post. On the charts Gold is explosive for the next 12 months. Fundamentally Gold is the safest bet for the next 12 to 18 months.
We are presenting a snapshot of a few important global equity indices and our predictions for the next couple of months. The closing date is today – 28th February 2020.
1. ^NSEI NIFTY India : October 2018 low was 10005. It closed today at a bearish level of 11202. Intra month low was 11175. The current 52 week low is 10637. There could be a sharp rally in the coming week as global equity markets including NIFTY are highly oversold. This global rally will be sold into. We predict this level of 10637 will be breached in March itself. The next crucial support level for NIFTY is 9300. Bull market is over in India if NIFTY cannot sustain 9300 in Q2 2020
2. ^ N225 Japan : December 2018 low was 19084. It closed today at 21143. Intra month low was 20916. Current 52 week low is 20111. We predict that 20111 will be breached in the short term and 19084 will be tested in Q2 2020
3. ^HSI Hong Kong : October 2018 low was 25125. It closed today 26130. Intra month low was 25989. Current 52 week low is 24900. We predict that 25125 will be breached in the short term. In Q2 2020 – even 24900 will be breached.
4. ^TWII Taiwan : October 2018 low was 9400. It closed today 11292. Intra month low was 11274. Current 52 week low is 10180. We predict that 10180 will be breached in the short term. In Q2 2020 – even 9400 will be breached.
5. ^KS11 South Korea : October 2018 low was 1986. It closed today 1987. Intra month low was 1980. Current 52 week low is 1980. We predict that 1980 will be breached in March itself. KOSPI ^K11 is one of the weakest equity indices in the world. It can slide to 1940 levels in Q2 2020
6. ^SSE COMP China : October 2018 low was 2449. It closed today at 2880. Current 52 week low is 2685. This index is being supported by the Chinese authorities. Huge liquidity has been injected by PBoC in February in the economy to contain the economic rot. But we are pretty sure to see a level of 2685 in Q2 2020. Chinese authorities will try to support their equity index. Some analysts are predicting a level of 2449 or even 2100 in Q2 2020. Fundamentally this index is the weakest index in the world. Let us watch the first support level i.e. 2685 and then study charts and fundamentals if the same is breached.
7. ^GDAXI DAX Germany : December 2018 low was 10800. It closed today at 11890. Intra month low was 11724. Current 52 week low is 11266. We predict that 11266 will be breached in the short term and 10800 will be tested in Q2 2020. One of the weakest indices in EU.
8. ^FCHI CAC 40 France : December 2018 low was 4615. It closed today at 5310. Intra month low was 5230. Current 52 week low is 5152. We predict that 5152 will be breached in the short term and 4615 will be tested in Q2 2020.
9. ^FTSE 100 UK : December 2018 low was 6592. It closed today at a very bearish level of 6580. Intra month low was 6460 which was a new 52 week low. We predict that 6460 will be breached in Q2 2020. Breach of 6460 – very bearish situation for this index
10. ^IBEX Spain : December 2018 low was 8286. It closed today at 8723. Intra month low was 8583. Current 52 week low is 8409. We predict that 8583 will be breached in the short term and 8286 will be tested in Q2 2020. Very weak index on the charts.
11. ^FTSE MIB Italy : December 2018 low was 18152. It closed today at 21984. Intra month low was 21680 which was also a fresh 52 week low. We predict that 21680 will be breached in the short term and 18152 will be breached in Q2 2020. One of the weakest indices in the world – both on the charts and fundamentally.
12. ^DJIA USA : December 2018 low was 21712. It closed today at a very bearish level of 25409. Intra month low was 24680 which was also a fresh 52 week low. We predict that 24680 will be breached in the short term. The next very important support level is 22180. If this support level for this index is breached in Q2 2020 – the level of 21712 will be tested within a matter of a couple of weeks and then the index may crash to a level of 20700. Please keep a very keen eye on ^DJIA.
13. ^GSPC S & P 500 USA : December 2018 low was 2347. It closed today at a very bearish level of 2954. Intra month low was 2856. Current 52 week low is 2722. We predict that 2722 will be breached in the short term. One of the weakest equity index in the developed world. This index will follow ^DJIA with a higher beta in the correction in Q2 2020 and feel it will correct to 2347 levels.
14. ^IXIC NASDAQ COMP : December 2018 low was 6193. It closed today at a very bearish level of 8567. Intra month low was 8264. Current 52 week low is 7292. We predict that 7292 will be breached in the short term. This index will follow ^DJIA with a higher beta in the correction in Q2 2020 and can correct to 6193 levels.
Investors globally and in India are advised
to cut exposure to equities to 25 % if not done already.
Balance in CHF Debt or physical Gold. Physical Gold will give
the best returns in 2020.
Dear investors and friends - globally and in
India : I wish you all a very happy and prosperous 2020.
This year i.e. 2020 is the year for Gold.
Our first target is Spot US $ 1650.00 pto which
should be tested in Q1 2020. After Gold has breached this
figure of US $ 1650 - it will test US $ 1800.00 to 1980.00
pto in a matter of 4 to 6 months.
If US $ 1980.00 pto is sustained in Q1 2020 -
then our year end 2020 target for physical Gold is around US
$ 2400.00 pto
We are around zero % invested in Stocks in
India and will start buying sector specific in India when
NIFTY is below 10000 mark. We will buy select Indian Stocks
in Pharmaceuticals, Bio Pharmaceuticals and Defence Stocks
at NIFTY at 10000 levels. At present NIFTY is 12000+
Global Stocks we recommend - Big Pharma (
specific to Diabetes Management ), Bio Pharma, US Defence
Stocks and US listed Gold Stocks. Start buying these Stocks
when ^ DJIA has corrected by 25 to 35 % from current levels
about 29000. We expect a major correction in global equity
markets in Q2 2020 or earlier led by ^DJIA.
One will see global equity indices at levels
October 2018 lows or lower by June 2020 ?
We are also bullish on Crude Oil as mentioned in our last year's posts. Average price for Q1 2020 should be in excess of US $ 69.00 per bbl for BRENT Crude. Analysts were talking of BRENT prices in the range of US $ 30.00 pbbl and we said that average in 2019 would be around US $ 65.00 pbbl levels !
Please be very careful with your exposure to Stocks in 2020
Physical Gold and CHF Debt look the beat bet
did not update since July 2019 as we do not understand the
reason behind US Equity and Indian Equity markets testing
new highs !
is a classic bull trap. Please take all your profits off the
Allocate 50 % of your funds to Corporate Debt and Equities.
allocate 50 % of your funds to physical Gold. Prices of Gold
are sustaining US $ 1450 pto level and as per our last
update - the next level would be US $ 1620 to 1650 pto.
These levels one can see by 12/31/2019.
Please cut your exposure to global equities
We did not update since January 2019 as we were
not able to understand the bullish nature of global equity
markets including India. None of the risks and fears
mentioned in the January 2019 update have mitigated or
vanished. Still the global equity markets were bullish and
Indian markets testing new lifetime highs on account of
In India - the incumbent Government was
returned to power after a thumping majority after the
general elections in April - May 2019.
We are bearish on global equity markets including India for the quarter July thru September 2019. We might see equity indices globally at lows as tested in December 2018. We are only a handful of analysts globally who are bearish on global equities in balance months of 2019.
Gold will zoom past US $ 1450 pto in the said
quarter. Spot Gold tested US $ 1440 pto in June 2019 and
corrected to US $ 1385 levels today as we are printing this
If Spot Gold prices can sustain a level of US $
1450 pto level in the said time frame as above - one might
see Gold prices shoot upto US $ 1620 to 1650 pto level. We
are bullish on Gold till the year 2025. A fresh 10 year bull
run from 2015 to 2025 !
We have mentioned our predicted levels for
Physical Gold at around US $ 4500 pto in the year 2025. By
the year 2030 - the levels could be even higher. One can
allocate about 50 % of investible funds in physical Gold at
these levels of US $ 1385+ pto. Balance 25 % to Debt
and only 25 % to Equities after massive correction in
balance months of 2019.
Please book your profits in equities as one may
not see current levels again in the balance months of 2019.
Allocate only 25 % of one's fund to Equities. Keep your
powder try for investing in Debt funds and physical Gold
We wish investors and all our associates a profitable 2019 !
We are printing this update today 03.01.2019 at closing of Indian stock markets.
We were correct in our prediction that global equity markets will correct very severely in December 2018 ! BINGO !!! We were spot on. All global equity markets corrected in December 2018 led by ^DJIA. Some renowned global equity analysts are now mentioning that the current ongoing correction in global equity markets will be more severe than market corrections of 1987, 2001 and 2008.
Analysts are now comparing this December 2018 correction to the corrections witnessed in global equity markets in 1929-31. Please refer to our July 2018 post. We mentioned that the corrections in the global equity markets would be more severe than in 2008 and that recovery from the bottom would take more than two and a half years !
We feel global equity markets will correct further in January 2019 and make fresh lows. Recovery from the said lows will be a slow and painful process stretching to July 2021. There would rallies from low of 2019 through Mid 2021. All rallies will be sold into from date to Mid 2021.
No analyst in the globe is mentioning that recovery will be as late as Mid 2021. Almost all the analysts are mentioning fresh lifetime highs for global equities in 2019. We are in complete disagreement with the said equity market analysts or pundits. We have said earlier and repeat – global equities saw their highs in 2018.
Major economies of the developed world have serious problems. USA – Fear of Bond Market crash and burgeoning Federal Budget Deficit. The US Budget deficit by September 2019 could be in excess of US $ 1.20 trillion. How does US plan to fund this huge deficit ?
In the US Bond markets the INVERSE YIELD CURVE between 2Y and 5Y US Bonds has to REVERSE, failing which US equity markets will test lower and lower levels till September 2008 levels are tested. Another factor is - friction between Oval Office and US Fed Chief’s Office on account of hike in interest rates in December 2018 by 25 bpts to 2.5% pa. Ongoing fears of Govt shutdown in USA on account of funding frozen by US Congress for building the wall along the US-Mexican border. US-China trade tensions is another fear looming large on the US Financial markets.
Another fear in US economy is – likelihood of rising interest rates by US Fed. The higher interest rates further slows down the US economy. Bond yields will rise in USA which leads to price correction in Bond prices. This puts pressure on investors who hold US Bonds as an investment. China holds US Bonds worth US $ 1.18 trillion out of its total forex reserves of US $ 3.06 trillion. Second largest holder of US $ Bonds is Japan’s Central Bank – BoJ. It holds US Bonds worth US $ 1.03 trillion out of its forex reserves of us $ 1.25 trillion. China has been slowly selling US Bonds since 2016 and off late is selling 2Y and 5Y US Bonds. Some point in time ( our prediction is June 2021 onwards till 2025 ) Chinese and Japanese will start dumping US Bonds. Almost all other Central Banks in the world – Switzerland, Russia, South Korea, Saudi Arabia etc will follow suit. This will lead to higher US Bond yields ( in excess of 15 % pa on 10Y ) and serious correction in US Bond prices. Our forecast is the imminent US Bond Market collapse by 2025 – 2030.
China – slowing down of the GDP growth. EU – Fear of Italian Banking Crisis. Japan – deflation and slowdown in exports. It is a sea of red around the globe in financial markets.
Italy is bankrupt. German Banks hold Italian Debt worth more than Euro 500 bn. Italian Budget is not sustainable nor is its Debt. The next economy to file for bankruptcy could be Italy ( Debt to GDP ratio nearly 130 % ) , Greece (Debt to GDP ratio is more than 175 % ) or Spain ( Debt to GDP ratio nearly 100 % ). Time frame is difficult to predict as we do not know when will the Euro printing presses stop further printing of Euros ? ECB is still following easy monetary policy to save these struggling members
Japan is in trouble with its Debt to GDP ratio exceeding 250 % in calendar 2017. It is staying afloat becoz it is an export oriented economy and also most of US $ 11.50 trillion is domestic debt owed to its citizens. Secondly the interest rates on its Sovereign Bonds are too low ( 10Y is at 0.024 % only ). So Japan can service its Debt with comfort. How long it can sustain this status is difficult to forecast as since 1999 – the Japanese economy is in a deflationary state. ^N225 tanked 5.1% on 25th Dec 2018. In fact what correction ^N225 has witnessed in December 2018 was - its worst December since 1958.
Germany – its largest commercial bank is struggling to stay afloat. DB was quoting near Euro 85.00 per share in June 2007. DB is quoting at lower than Euro 8.00 share at Frankfurt Stock Exchange as I print this update. Nearly one-tenth its price over a decade plus. This is not a good sign for DB. This bank can implode in the future if there is a “Black Swan” event in EU. DB has exposure to derivatives in excess of Euro 4.00 trillion. This is a very dangerous level of exposure to various derivatives that DB holds in its books.
Global GDP is US $ 70 trillion versus 2000 trillion of Global Debt – this debt figure is about 30x the Global GDP. No amount of money printing can save the impending explosion. This is the time to shift away from Equities and Bonds slowly and shift to at least 50 % of one’s funds to physical Gold. Balance one can remain in AAA rated Corporate Debt or cash in CHF.
Chinese Debt is not sustainable. Chinese economy is slowing down – weakest GDP numbers announced on 13.12.2018 since 2003. Asian markets tanked on 14.12.2018
We are now in a bear cycle as regards global equities is concerned. The global equities have topped out in 2018. We see a bear market in global equities till July 2021. This bear market could even extend to the year 2025 as mentioned above. Global pundits do not agree with our prediction.
The only silver lining is physical Gold held in private vaults in Europe or Singapore.
In India – there are issues between the Finance Ministry and Central Bank- Reserve Bank of India ( RBI ) for the past few months. RBI Governor resigned on 10.12.2018 with immediate effect.
The RBI's board meetings have come under the spotlight in recent months since the government started putting pressure on the central bank to ease lending curbs on PSU Banks and hand over more of its reserves to fund India's fiscal deficit. This is not good economics. India should fund it’s fiscal deficit by FDI and not by reserves from its Central Banker – RBI. This will be a bad precedent for the times to come. Fiscal Deficit is not generally funded by cash reserves from a country’s Central Bank. It is funded by FDI into the country. The new RBI Governor should put his foot down. We learn that the new RBI Governor will the toe the Govt of India line and give into the pressures – allow Fiscal Deficit to be funded from RBI’s reserves. One will see massive withdrawal of funds by FIIs from Indian Equities if Govt of India funds its fiscal deficit from RBI’s cash reserves and not from FDI.
In addition – the excess RBI cash reserves could also be used for providing fresh loans to ailing PSU Banks under PMA list of RBI. Even this is not good economic governance of the ailing Indian PSU Banking Sector. The weak PSU Banks should be merged with large profitable PSU Banks. The first merger was announced in 2019 today – Vijaya Bank and Dena Bank will be merged with giant Bank of Baroda. This is a good move by the Finance Ministry – Govt of India. Job cuts will lead to more synergies and cost control thereby boosting profitability. This will lead to India having ten large PSU Banks and not 21 PSU Banks.
Out of 21 PSU Banks in India – 11 are under PCA ( Prompt Corrective Action ). Banks under PCA – cannot lend anymore till they are off this list. The Indian Govt wants RBI to relax the Banks under PCA and ease lending curbs imposed on the said PSU Banks. There is a liquidity crunch in the Indian financial markets. There have been three large scale bank frauds in the Indian PSU basket since the last three years. This forced RBI to be restrict with PSU Banks lending norms. India ranks poorly at 81 out of 180 countries in global Index of Corruption of Berlin based M/s. Transparency International. It is a common practice in India to get loans from PSBs with kickbacks. That is the reasons you have bankruptcies reported by companies in India in the core sector – Steel and Airlines especially.
But with the election year in 2019 – the Finance Minister and Prime Minister will use some percentage of excess RBI cash (about US $ 50 bn ) for funding FDI or bolstering ailing PSU Banks. Both are not good practices. This was the reason the RBI Governor resigned. The new RBI Governor – will toe Govt of India dictat.
GoI plans to re-capitalize a few PSU Banks with fresh capital injection of about US $ 4.0 bn. It needs this cash – either from a stake sale in PSUs or from RBI’s surplus cash reserves. GoI also has to keep the Budget Deficit at 3.3 % of its GDP for the current fiscal FY2019.
1. ^NSEI NIFTY India - October low was 10005. As I print this update NIFTY closed today 3rd January 2019 at a level of 10670. We feel NIFTY will breach the level of 10005 in Q1 January 2019. The next levels are R1 9400 R2 9000 which will be tested in Q1 2019. ^NSEI has not fallen by the similar percentage falls in the past three months - as the other mentioned equity indices. It will now fall to be in level with its peers in the global equity markets. India is the fastest growing economy in the world and hence its equity markets did not fall as its peers in the correction in December 2018. Almost all equity markets in the world tested their yearly or multi-year lows except Indian equities in December 2018. In the coming months Indian equities will align with other global equity indices. We will see NIFTY testing its 52 week low level of 9400 in January 2019 or latest in Q1 2019.
2. ^N225 Japan - October low was 20347. As predicted this low of 20347 was breached on 20th December 2018. ^N225 corrected to a fresh 52 week low of 19084 on 26.12.2018. We predict ^N225 will test fresh low of R1 18300 R2 17110 in Q1 2019
3. ^HSI Hong Kong - October low was 25125. We predict we will again see the level of 25125 or lower in Q1 2019
4. ^ TWII Taiwan - October low was 9400. It tested a low of 9479 on 25.12.2018. We predict we will again see a level of 9400 or lower in Q1 2019.
5. ^KS 11 South Korea - October low was 1986. It closed today 03.1.2019 at 1994. We predict that we will see again the level of R1 1986 or lower in Q1 2019.
6. SSE COMP China - October low was 2449. It corrected to 2463 in December 2018. We predict that we will see again the level of 2449 or even 2000 in Q1 2019. Chinese industrial firms reported drop in profit – first time in three years.
Japan, Hong Kong/China, South Korea and Taiwan are very closely linked to the US economy as this US Market is their single largest export market. Be it - Consumer Products, White Goods, Cars, Semi-Conductors, Telecom Equipment or other Electronic Components including Memory Chips etc.
^DJIA, ^IXIC NASDAQ and ^GSPC S & P 500 – corrected severely in December 2018. On 26.12.2018 :
a) ^DJIA – tested its fresh 52 week low of 21712 on intraday low basis. ^DJIA recovered very sharply from this yearly low to close at 22878 – up 1086 pts ( 4.98 % ) from its previous day’s close. This is the largest single day percentage gain – 4.98 % in ^DJIA since March 2009. It is the single largest absolute numeric gain in ^DJIA in its history – up 1086 pts in a single day at close. Any correction to 21560 will push ^DJIA into bear territory. If 21560 is breached – it will enter bear territory. The next resistance levels for ^DJIA are - R1 21000 R2 20200 R3 18860 in Q1 2019
b) ^GSPC S & P 500 – tested its fresh 52 week of 2347 on intraday basis. S & P entered a bear market but recovered from this yearly low to close at 2468 up 117 pts ( up 4.96 % ). This is the single largest daily percentage gain in the history of S & P. If 23351 is breached S & P 500 will crash to R1 2200 R2 2058 in Q1 2019.
c) ^IXIC NASDAQ COMP – tested its fresh 52 week low of 6193 but closed up smartly at 6554 up 5.84 %. NASDAQ COMP entered bear territory after it breached 6500 but recovered from bear territory today to close at 6554. If 6500 is breached - next levels are R1 6100 R2 5690 which will be tested in Q1 2019.
We feel all the above three benchmark US Equity indices will re-enter bear territory in January 2019 or latest Q1 2019.
7. ^GDAXI DAX Germany - October low was 11459. As predicted – level of 10800 was breached. ^GDAXI is in now in bear territory. Next level is R1 9520 which will be tested in Q1 2019
8. ^FCHI CAC 40 France - October low was 5095. Tested a fresh 52 week low of 4615 on 27.12.2018. ^FCHI has just entered bear territory. Next level is R1 4250 which will be tested in Q1 2019.
9. ^FTSE FTSE 100 London - October low was 6867. Tested a fresh 52 week of 6592 on 27.12.2018. Next level is R1 6320 which will be tested in Q1 2019
10. ^IBEX Spain - October low was 8849. ^IBEX tested a fresh 52 week low of 8286 on 27.12.2018. ^IBEX is now in bear territory. Next levels are R1 7980 R2 7450 which will be tested in Q1 2019
11. ^FTSE MIB Italy - October
low was 19167. ^FTSE MIB tested a fresh 52 week low of
18152 on 27.12.2018. ^FTSE MIB is now in bear territory.
Next levels are R1 17920 R2 16720 which will
be tested in Q1 2019. This is the most bearish Index in the
Eurozone as we fear a full blown banking crisis in Italy
2019. Banca Carige, headquartered in Genoa, Italy is in
trouble looks like. It denied a cash call from one of its
largest shareholders on 27.12.2018.
Brent Crude breached US $ 57.00 ppbl as predicted and crashed to US $ 50.66 on 25.12.2018 - which is yearly low level for Brent Crude Oil price. Fears of a global economic slowdown gripped the Crude Oil markets. Hence this massive correction from US $ 57.00 to nearly US $ 50.00 pbbl in matter of a few trading days in end of the year.
Brent should find support at US $ 50.00 pbbl. If this level of US $ 50.00 pbbl is beached – there will be blood bath in Crude Oil prices in Jan to March 2019. Expect a price of US $ 45.00 pbbl in Q1 2019 if US $ 50.00 pbbl level is breached. It looks that US $ 50.00 level will not be breached in January 2019. OPEC and Russia wish a price level of US $ 65.00 pbbl for BRENT as an average price for 2019.
Gold spiked to US $ 1290+ pto level today on 03.1.2019. We expect prices in excess of US $ 1360.00 pto or even higher in Q1 2019.
We were correct in our prediction that global equity markets led by ^DJIA will correct further in November 2018. Almost all global pundits were saying by end Nov 2018 that global equities will recover from their October 2018 lows and retest yearly highs. There was recovery but short lived and fresh downward journey started in the three trading days of December 2018 led by ^DJIA.
We feel global equity markets will correct very severely in December 2018. As mentioned earlier - the spillover effect may lead us to January 2019.
Global equities had a smart recovery from October 2018 lows on account of various factors including Brent Crude Oil prices correcting from US $ 72.00+ levels to sub US $ 58.00 pbbl levels - the recovery was short lived.
As I print this update Brent Crude Oil Feb 2019 Futures are quoting at around 60.40 levels. Brent Crude Oil Futures - Feb 2019 Contract could test a level of US $ 57.00 in December 2018 or maybe even lower. It is very difficult at this juncture to predict short term Brent Crude Oil prices. For the year 2019 - we feel average would be around US $ 65.00 ppbl for Brent Crude Oil. At this price both OPEC and Russia are happy.
US - China trade war is still un-resolved. The time window has been extended by 90 days. It does not mean that the issue is resolved. This postponement of the decision also led to the above mentioned recovery. This fear remains unresolved.
Italian Budget crisis - still looms large on EU Equity markets. This fear remains unresolved.
A new fear has added to the US financial markets within the last couple of days - US Bond Market yields. The yields on the 2Y Sovereign US Bonds turned higher than the 5Y Sovereign US Bonds. This phenomenon in US financial markets is called - INVERSE YIELD CURVE.
The gap between 5Y and 10Y is also closing up. This is as per technical analysts is a signal of US economy slipping into recession. We are not experts on this phenomenon.
As per our understanding - this ( development of INVERSE CURVE ) phenomenon fundamentally indicates that investors in US Bonds do not have faith in the long term US Sovereign Debt. A very very bearish sign for the US Financial markets and US economy.
We might be proven right that global equity markets will be bearish till June 2021 !
We mentioned in our July 2018 post that we see a two and half year bear market forward in global equities !
We feel for the past few years that total US Federal Debt is too high and is at un-serviceable levels as mentioned as under. US Bonds could lose their AAA+ rating once again before 2020.
We are bearish on the US economy for two prime reasons :
a) Total US Federal Debt is approx US $ 17.00 trillion. We feel this figure will touch US $ 20.00 trillion by the year 2020. US will have to raise its Debt Ceiling. We are sure on this happening before December 2020.
b) US Budget Deficit could be in excess of US $ 1.20 trillion by end September 2019. How does US Fund this Deficit ? Again issue fresh Bonds or print more US Dollars ?
Markets discount the future. So we feel we will see ^ DJIA at levels of around 23350 or lower in December 2018 through Q1 2019. If ^DJIA breaches 23350 - we will issue a fresh update. This is a very crucial support level for ^DJIA = R1 23350
^DJIA is trading currently at 25000 levels down from yearly high of 27000 level. As of date ^DJIA has corrected by only approx 7.5 % this calendar year from its high of 27000. A correction to 23350 - will translate to a correction of approx 13.5% from the high of 27000.
A brief snapshot of major global equity indices as per my understanding is as under :
1. ^NSEI NIFTY India - October low was 10005. As I print this update NIFTY closed today at a level of 10600. If the level of 10005 is breached - we predict NIFTY will crash to level of 9950 in December 2018. For NIFTY to breach 9950 level will be very bearish. It will crash to a level of 9000. So 9950 should hold - failing which there will be a panic in Indian Equity markets.
2. ^N225 Japan - October low was 20347. It closed today at 21502. We predict that we will see again the level of 20347 or lower in December 2018.
3. ^HSI Hong Kong - October low was 25125. It closed today at 26156. We predict we will again see the level of 25125 or lower in December 2018
4. ^ TWII Taiwan - October low was 9400. It closed today a bearish level of 9685. We feel we will again see a level of 9400 or lower in December 2018
5. ^KS 11 South Korea - October low was 1986. It closed today at 2069. We predict that we will see again the level of 1986 or lower in December 2018.
6. SSE COMP China - October low was 2449. It closed today at 2605. We predict that we will see again the level of 2449 or even 2000 in December 2018 through Q1 2019.
Japan, Hong Kong/China, South Korea and Taiwan are very closely linked to the US economy as this US Market is their single largest export market. Be it - Consumer Products, White Goods, Cars, Semi Conductors, Telecom Equipment or other Electronic Components including Memory Chips etc. Any severe correction in ^DJIA or ^IXIC NASDAQ or ^GSPC
S & P 500 will have a severe impact on the above said Equity Indices in - Japan, Hong Kong/China, South Korea and Taiwan.
The key Equity markets in EU also correct when ^DJIA or ^IXIC NASDAQ or ^GSPC
S & P 500 correct though the beta maybe lesser than the above Asian markets as above.
7. ^GDAXI DAX Germany - October low was 11459. Currently trading at a level of 10936 as we print this update. This is a fresh 52 week low. Further correction is expected till levels of approx 10800 levels or lower in December 2018.
8. ^FCHI CAC 40 France - October low was 5095. Currently trading at a level of 4811 as we print this update. This is a fresh 52 week low. Further correction is expected till levels of approx 4525 levels or lower in December 2018.
9. ^FTSE FTSE 100 London - October low was 6867. Currently trading at a level of 6732 which is a fresh 52 week low. Further correction is expected till levels of approx 6320 levels or lower in December 2018.
10. ^IBEX Spain - October low was 8849. Currently trading at a level of 8884. Further correction is expected till levels of approx 8620 levels or lower in December 2018.
^FTSE MIB Italy - October low was 19167. Currently trading
at a level of 18829 which is a fresh 52 week low. Further
correction is expected till levels of approx 17900 to 16720
levels or lower in December 2018 through Q1 2019. This is the
most bearish Index in the Eurozone as we fear a full blown
banking crisis in Italy in the said period.
We suggest to all investors - in India or around the globe to start buying physical Gold. Currently trading Spot @ US $ 1238.00 pto in the European markets. We have already mentioned our short term and long term targets for physical Gold.
to only allocate 15 % of their funds for Equities. Around 35 %
for AAA Rated Corporate Debt and balance 50 % to physical Gold.
We understand that this 50% allocation at present seems too high
but wait and see 2020 onwards !
all saw what happened in October 2018 to the global stock
markets. We were correct in our predictions !
October 2018 - there was a sharp correction in global
equity markets, led by sharp declines in the US Equity markets
and European equity markets - as predicted ! A lot of equity
markets around the world tested yearly or multi-year lows. Some
indices while correcting reminded us of 2008 !
view for November and December 2018 remains unchanged as none of
the following fears have left the markets :
a) Interest Rate hikes by US Fed
b) China - USA Trade Issues. Iran sanctions.
Italian Banking crisis
might have a temporary pull back in global equity indices led by
^DJIA and ^GDAXI but we will see fresh lows in almost all the
major equity indices in November through December 2018. The
spillover could be till January 2019.
of now just start buying physical Gold. We could see a level of
US $ 1400.00 pto in the coming months.
Oil futures could see a sharp spike from the current US $ 72.45
pbbl levels in the coming two months.
Investors as advised to stay away from equity markets for the next couple of months.
We were bearish on the global equity markets
including India. We still are bearish for global equity
markets till end December 2018. Emerging market equities and
currencies were hammered in September 2018.
We will now see equity markets in developed
economies get pounded in Q4 2018.
As predicted Brent Crude Oil tested US $ 84.00 pbbl level in September 2018. Our next level for Brent Gold price is US $ 90.00 pbbl within December 2018.
Indian Equity markets were down in September
2018. We predict NIFTY to test its 52 week low of 9850 in
October 2018. We also predict NIFTY to test 9500 or even 9000
level by December 2018. As I print this update NIFTY is
quoting at 10900.
Same hold true for BSE SENSEX. It will test its
52 week low of 31500 in October 2018. It will further slip to
28500 or even 27000 by December 2018. BSE SENSEX is trading at
36250 as I print this update.
INR has depreciated against the US $ from a level of 64.00 to a level of 73.61 as of today. All emerging market currencies have depreciated against the mighty US Dollar. We feel we will see a level of INR 75 to a US Dollar in October 2018.
US Dollar cannot keep rising against the world
currencies the way its has rallied since May 2018. US Budget
deficit and money printing will have its effect in Q4 of 2018.
US Dollar will correct in December 2018. In December it would
be the right time to buy physical Gold.
Investors are advised to limit their exposure to blue chip equities to around 25 % of their investible funds. Balance in Debt instruments and physical Gold.
Global Equity markets and Indian markets can
correct from the current levels by 15 to 20 % from date till
end December 2018. Limit your exposure to equities.
Invest in Debt instruments and physical Gold till
the equity markets bottom out in Dec 2018 or Jan 2019.
Investors might be thinking the reason why I did not update the India web page since Feb 2018 ? I was not clear as to why the global equity markets including India were still bullish since Feb 2018 to June 2018 with so much negative indicators around the world ? But markets have their own reasons to move up or down.
I am clear now for the journey forward from July 2018 through December 2018.
Global and Indian investors are seriously advised to prune their exposure to Equities and Mutual Funds to the tune of 75 % or even 90 %. Sit on cash or buy physical Gold Bars and keep under the bed in one's bedroom !
Please do consult your CFAs and act accordingly.
I am predicting a 25 to 30 % correction in Global and Indian Equities in July through December 2018. The correction could be worse in EU and Asian Markets. Brent Crude Oil could spike beyond US $ 84.00 pbbl due to geopolitics and Iran situation. There could be a massive public revolt in Iran which will be crushed by the clerics. About 3.00 million barrels a day supply of Crude Oil may be off the market due to - Iran, Venezuela, Libya and Iraq outages over the next six months through December 2018.
The global equities situation could be worst than in September 2008. The recovery in September 2008 through March 2009 was spectacular. This time the recovery will take about two and a half years and will be very painful for the bulls.
The reason of this global correction will be from a banking crisis in Greece, Italy and/or Spain. The trigger may not be from the US economy.
Banks in Italy and Spain are not in good health and may need bailouts. Greece will again be bankrupt for the third time since 2011. Venezuela is bankrupt. Argentina is on the verge of bankruptcy. Chinese and US exports will further dip. Correction possible in the prices of Agro Commodities - Soybeans, Wheat and Soybean Oil.
The best way forward has to be capital protection. Cash or physical Gold is the only savior for the impending/predicted correction.
Gold could jump above its
year high of $1380 and potentially beyond US $ 1450.00 or
even US $ 1650 pto during the next six months or so.
Global equity markets are on fire
including equity markets in India with BSE SENSEX crossing
36,000 levels and NIFTY crossing 11000 levels. We advise
equity investors to take profits home and start allocating 10
to 20 % of investible funds into physical Gold over a 10 to 15
year holding period. We could see levels of Gold at US $ 6000
to 9000 pto by 2035 to 2040.
First Bull Run in Gold was witnessed
when Prez Nixon scrapped Gold peg to the US Dollar under
advise of then Chairman US Fed Reserve on 15th August 1971.
Gold prices moved from US $ 35 pto US $ 850 pto in 1980. 1800%
plus returns !
Second Bull Run from 1999 to 2011
when prices touched US $ 1920 pto in September 2011. 666 %
Third 20 year Bull Run started in Gold as per our estimates in Dec 2015 and will run till 2040. We expect prices to be near US $ 6000 pto in 2035 and near 9000 pto in 2040. 570% returns expected in the 20 year period !!!
It will be close to a year that India
witnessed de-monetization ( 8th Nov 2016 ) and GST was rolled
out in India a few months back in 2017.
Both these events were historical in
the Indian economy since it's independence in 1947. Indian GDP
growth is highest in the world till date in 2017 inspite of some
initial hiccups due to slow implementation of GST and slightly
lower GDP forecast for 2018. For 2018 - also @ 5.80 % India will
be the fastest growing economy in the world. Chinese GDP figures
we dont trust. They are all stage managed !
BSE SENSEX and NIFTY traded near their
life time highs since the last six weeks. Today 30.10.2017 - BSE
SENSEX and NIFTY closed at their life time highs - 33266 and
10360. Since both the indices are in uncharted territories -
only extrapolation or trend analysis is the tool for prediction
in the next two months of calendar 2017. Trend lines indicate
further bullishness but sharp corrections are possible in bull
markets. In fact these corrections are a healthy signs.
We expect a sharp correction in the
global equity markets over the next eight weeks and Indian stock
market will also correct but with a lesser beta. On sharp
corrections we advise Indian investors to start buying the
following stocks for a period of two to three years perspective
1. LARSEN & TOUBRO
2. TATA POWER
3. ASTRA MICRO
These are military hardware related
stocks in the Indian scenario.
HAL will come out with its maiden IPO before 31.3.2018. We will advise accordingly.
We are back and apologize to investors that our prediction regarding Ms. Hillary Clinton was incorrect. We can only say - To err is human !
Indian stock markets are near their 52 week and lifetime highs since yesterday/today i.e. 3rd and 4th April 2017. BSE SENSEX tested 29927 and NIFTY tested 9245. Indian stock markets will be in bullish phase and benchmark indices may test new life time highs in April 2017. Time to take profits home at these life time levels !
We advise Indian investors to book profits in Indian Stocks as SW Indian Monsoon may be deficient in 2017 i.e. June to August 2017. There is this underlying risk in June 2017.
We are recommending a very old
favorite stock of ours for medium term investment - around a
year. The stock is a profit making Defense PSU stock -
BHARAT ELECTRONICS Ltd. Buy at dips around Rs. 150 to
Rs.153.00 levels. Currently trading at Rs. 160.00. This can
be a multi-bagger over the next three years. One year target
- Rs. 245.00.
We were incorrect in our prediction
regarding Hillary Clinton. Gold we were BINGO !!!
We said that Gold prices will dip below US $ 1190.00 pto and that at sub US $ 1200 levels - it is a good level to start buying physical Gold in small lots. Gold prices Spot NY tested a low of $ 1178.00 on 11/25/2916 and closed at $ 1178.00 pto.
Investors can start buying physical Gold at these levels of around $ 1180.00 till $ 1050.00 pto. One could see this level of $ 1050.00 in December 2016 or January 2017 - if Indian Government announces a total or partial ban on import of Gold Bars in order to control the deprecating Rupee parity with US Dollar.
The demonetization of INR 500.00 and INR 1000.00 denomination currency notes w.e.f. 11/9/2016 has rattled the Indian grey market economy. Slush money due to the tune of INR 14.20 trillion ( US $ 210.00 billion ) was in circulation in India as per GoI estimates as on 11/8/2016. With one master stroke - this money has become worthless paper. Huge blow to the un-accounted cash economy. Now with loop hole plugged by the GoI - Indian Banking system will be flush with funds and there will be huge surge in taxes collected by the GoI over the next six month or so. Interest rates will come down in India. Personal income tax rates may come down in India. Only 1.30 % of Indian population pay taxes. Imaging 30.00 % Indians start paying income tax in the next one or two years ? India could have a Budget Surplus !!!
Property prices will correct
seriously for another six months in India. Auto and White
Goods sectors will also correct In India. 2018 - a golden year
to buy property in India and 2017 - a golden time to buy Gold
Indian GDP will contract by 1.50 % (
annulaized basis ) over the next 6 months. Indian GDP will
start to pick up by April/May 2017 onwards.
Out of a population of 1200 million Indians - less than than 530 million Indians have access to banking sector. With the demonetization drive the Indian Government under the reformist Prime Minister Modi wants the Indian economy to be ridden of corruption and cash-based economy.
Banking sector in India will be
flushed with funds over the next months as the Indian economy
becomes more dependent on bank transfers and less cash
transactions. There will be pain in the economy for the next
six months as service providers and traders will be paid by
Cheques and Bank transfer and not cash. The new 500 and 2000
INR denomination currency notes will be in the banking system
in sufficient numbers over the next six months.
It will take Indian consumers about six months or so to change their purchasing habits from paying cash to paying by cards and over the internet/mobile phones/payment banks/payment apps etc
Indian equity markets also corrected
as predicted. BSE SENSEX and NIFTY are trading below their 200
DMAs - 26750 and 8130. I expect BSE SENSEX test January 2016
lows of 22500 and NIFTY 6800 over the next three to four
INR is trading at 68.70 to a USD. We
could see a level of 71.00 or even 72.00 over the next three
months - if FIIs pull out about US $ 50.00 to 60.00 billion
from the Indian equity markets. I feel these will be very good
levels to buy Indian equities for a two year time horizons. We
will mention sectors to buy into at these levels. Individual
stocks - we recommend to our clients in our paid
Indian Central Bank under the new Governor cut the key benchmark lending rate by 25 bpts to a record low of 6.25%. The Repo Rate now stands at 6.25% and the Reverse Repo rate is pegged at 7.25%. Indian stock markets cheered this development as cut in Repo rate will push Indian Banks to cut lending rates to Indian consumers in Home sector and Auto Sector borrowing. This is good news for Indian consumers who have access to banking !
is tension between India and Pakistan over international borders
and this could escalate. In view of this we advise Indian
investors to book profits in the stock markets and buy Gold at
sharp dips. Gold is now trading at US $ 1270.00 pto.
If US Fed indeed increase interest rates - one could see Gold correcting to sub US $ 1200.00 pto levels. At sub US $ 1200.00 pto levels - it is a good opportunity to start buying physical Gold in small lots.
We are predicting a historic win for Ms. Hillary Clinton as the US President in the forthcoming US Presidential elections. She will get 51.3 % vote and will be the first woman US President at 69 years of age.
are serious problems with the banking sector in EU. DB in
Germany now trades below Euro 10.00 per share. If DB collapses -
there will be chaos in the banking sector in EU and across the
Atlantic. This will be moment bigger than Lehman.
investors to prune their exposure to European equities due to
this banking sector chaos in EU which could snow ball. Gold is a
sure bet for the next 5 to 6 years.
Hold Gold in physical form outside the Banking system in all parts of the world.
The update is late as we were waiting for the trend to be clear for the Indian equity markets. As predicted GST Bill as passed by both houses of the Indian Parliament after much political debate and some concessions. Our prediction was BINGO !
We had predicted that BSE SENSEX would test 30,000 and NIFTY 10,000. BSE SENSEX is near 29,000 and NIFTY 9000. Our targets will be tested in October 2016.
We are bearish in the long term for Crude Oil even if Saudis find a new bed partner in Moscow.
Gold prices will be bullish in the near term.
markets have recovered to pre BREXIT event levels but British
Pound Sterling has been battered. Gold and Silver have rallied
smartly with latter clocking better percentage gains than the
former precious metal. Gold and Silver will rally further till
end of this year. Our December 2016 target for Gold is US $ 1450
equity markets will be on fire in July 2016 as the much delayed
GST Bill will be cleared by Parliament. BSE SENSEX should breach
30,000 level and NIFTY could break past 10,000 level in July.
For traders this is a good opportunity to buy front line
momentum stocks and make a quick buck.
Cheers to the Indian Equity markets for July 2016 !
BSE SENSEX closed today 3rd June 2016 at a bullish level of 27000 nearly an eight month high and so also did NIFTY at 8250. Indian equity markets from here on are contingent on the progress of SW Monsoon.
Since our last post
the RBI cut Repo Rates by another 25 bpts to 6.75 %. The
Indian economy grew at 7.60 % in the fiscal 2015-16 – highest
annual GDP growth rate. The fiscal situation was also in
control with fiscal deficit at INR 5320.00 ( US $ 79.40
billion ). The next trigger for the Indian economy and equity
markets is the position of the SW Monsoon. A normal SW Monsoon
is bull trigger for the economy and the equity markets. FIIs
will pump in money in July and August 2016 – if the Indian SW
Monsoon is normal or above normal.
We still stick to
our prediction that global markets will be bearish in 2016 as
^SSE COMPOSITE in Shanghai will test 2000. Chinese economy is
sluggish and huge amount of stimuli by PBoC has had little
impact on the economy. Brazil continues to contract. Japan is
in “de-flation”. USA and EU are growing at below 2.50 % per
Gold is the best bet as an investment class for the balance period of calendar 2016.
BRENT Crude Oil
could at best US $ 60.00 pbbl.
are not posting a detailed report for April 2016. We are waiting
for ^SSE COMPOSITE Index in Shanghai, China to test 2100 or
2000. We predicted that we will see these levels for ^SSE
COMPOSITE in Shanghai in Q1 2016, but we only saw a low level of
2656 in January 2016.
COMPOSITE Index closed today 3/31/2016 at 3000. We still stick
to our prediction that ^SSE COMP will test 2100 or lower at 2000
in April or May 2016
BSE SENSEX closed today 3/2/2106
at 24243 down marginally from the last reference close of 24455. NIFTY also closed
marginally lower at 7369 against the last reference close of
SSE COMP closed today at
2850. We have predicted a level of 2100 or 2000 for ^SSE
COMPOSITE WITHIN Q1 2016. Let us see how does this index move
in the month of March 2016 and ho close are we to our
Union Budget was presented in India on 2/29/2016. Union Budget was pro-farmer and pro-poor man’ budget with high allocation to the sagging Agriculture Sector in India.
We had predicted that global equity markets will test further lows in February 2016 and we were accurate. The following indices tested fresh 52 week lows in the month of February 2016.
1. ^N225 15429
2. ^BSESN 22525
3. ^NSEI 6823
4. FCHI 3951
5. DAX 8773
6. FTSE 5596
7. NASDAQ 4213
8. FTSEMIB 15849
9. IBEX 7862
10. AXJO 4707
These indices after testing their fresh 52 weeks lows rebounded but the rally may not sustain because of the situation in China and low Crude Oil prices.
Gold is bullish as long
as it trades above US $ 1140.00. Spot Gold NY closed today at
$1239.00 pto. The prices tested a high of $ 1260.00 pto in
WTI Crude oil is trading
near a very critical support level of US $ 34.00 pbbl. Last
trade at CME was at US $ 34.80 pbbl for April contract.
If prices of WTI Crude Oil fall back to the recent lows of
about US $ 26.00 pbbl - then expect global equities to test
further lows. Even lower than February 2016 and August 2015
lows. If WTI Crude can sustain US $ 34.00 pbbl level - then it
can rise to US $ 38.00 per bbl. Geopolitical - If there is war
in the Middle East - Iran and Saudi conflict then prices can
zoom to US $ 60.00 pbbl.
China will spook the
global equity markets and Gold prices will zoom to $ 1290.00
to 1320.00 pto. Keep a very close on the Chinese equity
markets and price of Crude Oil.
repeat the perils in the equity markets are linked to economic
situation in China and Crude Oil prices. Investors to keep their
powder dry and buy in deep cuts.
We had mentioned in
our last update that Chinese equity markets will correct and
will play a spoil sport for bulls. ^SSE COMPOSITE corrected from
2900 levels as of 15th January 2016 to test a fresh 52 week low
of 2656 as of today 2/1/2016 ( near 10 % correction ). FIIs have
pulled out approx. US $ 600 billion since the past six months
and the trend continues the same way.
PBoC has devalued
the Yuan further and it is felt that they will let it devalue to
a level of 7.00 Yuan to a US Dollar. The Chinese banks still are
struggling with NPAs. The next support levels to watch for ^SSE
COMPOSITE are : S1
2250 S2 2050 S3 2000
We have mentioned in
our last update that we predict a level of 2000 for ^SSE
COMPOSITE. This level will create a chaos in global equity
markets with a sharp cut.
advised to keep a very close watch on the extremely volatile
^SSE COMPOSITE Index and plan their investment strategy.
Gold was bullish and tested a high of US $ 1130.00 pto NY SPOT on 2/1/2016. Gold will be extremely bullish if it trades above its 200 DMA of US $ 1140.00 pto. Investors can buy Gold if it sustains US $ 1142.00 pto for two weeks or so.
We wish all our investors, associates and partners in India and around the globe a prosperous and profitable 2016 ! This December 2015 post was skipped as we were waiting to see the impact of interest rate hike by US Fed on 16th December 2016. Interest rate hike by US Fed @ 25 bpts had no impact on the US and global financial markets.
January 2016 is delayed as we waiting for the start of correction in global equities. The large correction we were anticipating in Q4 2015 is in fact underway as we post this update. Most equity indices around the globe are near their 52 week lows and a few are now in bear territory as they trade below their 52 week lows.
BSE SENSEX closed today Friday - 1/15/2016 at 24455 down 6.50 % from the last reference close of 26155. NIFTY closed at 7427 breaking the September 2015 low of 7546. We are bearish on Indian equities except Sugar stocks for Q1 2016.
^DJIA, NASDAQ and major European indices are also in the correction mode. They will correct further and re-test lows of August/September 2015.
Crude Oil prices tested 12 year low today. WTI March Futures 2016 tested US $ 29.13 pbbl and BRENT March 2016 Futures tested a low of US $ 29.72 pbbl. This is not a good news for global financial markets and economies. This level of crude over-supply shows a deep malaise in world economic system. Brazil is having a negative GDP growth. Resource based export economies – Russia, Australia, Latin America, Africa and GCC are all having budget deficits. Commodity indices are at record lows with levels close to the year 1991. More pain to come in 2016.
China will spoil the party and the undergoing correction will cause further pain with our target of ^SSE COMP at around 2000 for Q1 2016. ^SSE COMP closed on 1/15/2016 in bear territory at 2884.
A stronger US Dollar may mitigate losses in ^DJIA but this leads to further lower prices of commodities and also Gold. We advise investors to allocate 15 % of funds to Gold, 15 % to Equities and balance in pure debt funds. When the global equity markets bottom out in Q1 ( we will advise ) – investors should re-enter the equity markets.
We advise investors to stay away from investment in Gold till further advise.
We are not publishing a detailed post
for November 2015 as we expect a correction in global equities
lead by ^DJIA in Q4 2015. This was mentioned in our last
The trigger would be the US Debt ceiling - which will need to be hiked by US Congress as we feel that in November or December 2015 - US Fed will be "out of funds". US Fed will request US Congress to raise the Debt ceiling from the current cap of US $ 18.10 trillion.
US Fed would request the US Lawmakers
to hike the Debt ceiling from US $ 18.10 trillion to US $
20.00 trillion till 2020. This is our estimate.
If this Debt ceiling request is indeed made to the US Congress with Q4 2015 - we will witness a serious correction in global equities.
Economic activity is further slowing
down in China and India. All other countries are also having
GDP growth issues. Gold prices have again been hammered down
by speculators on the back of strong US Dollar.
We still stick to our prediction that
US Debt ceiling will be hiked in November or December 2015.
Hence we are bearish on global equity markets including India.
Gold may spike if what we have predicted does happen within Q4
BSE SENSEX closed today on 31st August 2015 at 26283 down 6.52 % from the last month’s reference close of 28115. BSE SENSEX closed below its 200 DMA of 27680. This is bearish signal for the near future. NIFTY closed today at 7971 down about 6.00 % from last month’s reference close.
The levels to watch for BSE SENSEX and NIFTY are as follows :
R1 26680 R2 27180 R3 27680
S1 25800 S2 25000
R1 7810 R2 8080 R3 8230
S1 7800 S2 7580
We were correct in our predictions that Global Equities including Indian Equities will be bearish in the month of August 2015. China and Brazil spoilt the party !
We are reproducing excerpts from our 5th October 2007 – webpage as under :
I am advising investors to exit from the equities. Investors who hold blue chips for “keeps” can sell the same in the ‘F & O’ window so as to avoid erosion of capital. Invest in Gold and/or sit on cash
WE ARE AGAIN ADVISING GLOBAL (INCL – INDIA ) INVESTORS WELL IN ADVANCE THAT THEY SHOULD TRIM THEIR EXPOSURE TO EQUITIES TO AS LOW AS 10.00 % to 15.00 % AND BALANCE SIT TIGHT ON CASH. WE PREDICT A MAJOR CRASH IN GLOBAL EQUITIES IN A PERIOD FROM SEPTEMBER THOUGH DECEMBER 2015.
We predicted a major correction in global equity markets on 5th October 2007 for 2008 and advised investors much in advance. We advised investors to invest in Gold or sit tight on cash. We all know global equity markets corrected by about 25 % in January 2008. Then the markets corrected from July 2008 to September 2008 ( Lehman Bros crisis )
We were also partially correct on Greece political scenario. PM Tsipras resigned after getting Euro 86.00 billion bail out from ECB and EU. IMF did not participate in the third bail out as it feels Greek Debt is unsustainable. There is a political chaos in Athens with no Govt in place till 20th September 2015 when there will be fresh elections. FITCH feels that with the new Govt without Tsipras as PM – what is the guarantee that the new Govt will honour the terms of the Euro 86 billion bail out ? Very difficult to answer this query from FITCH ?
The monthly high for BSE SENSEX and NIFTY were 28316 and 8592 respectively. On 24th August 2015 global equities markets crashed including India. Traders called it a “BLACK MONDAY”. BSE SENSEX tested a intraday low of 25625 and NIFTY tested a low of 7769. At close on 8/24/2015 BSE SENSEX had lost whopping 1624 pts and NIFTY lost 490 pts. SENSEX and NIFTY fell by nearly 5.90 % each at close. It was the worst daily fall in BSE SENSEX and NIFTY since 2008.
Intra day lows on 8/24/2015 and 8/25 for some important indices were as follows :
^N225 = 17747
^HSI = 20,865
CAC 40 = 4230
DAX = 9338
FTSE = 5768
MIB ITALY = 20,158
IBEX SPAIN = 9502
^DJIA = 15,379
S & P 500 = 1867
BSE SENSEX = 25298
NIFTY 50 = 7667
^SSE COMP = 2851
The first trigger for correction in the global markets was Chinese Equity markets. This had worldwide impact. Chinese Govt could not stop the crash in the Chinese equity markets even with direct purchase of equities through PBoC and Pension Funds. The latter is hara-kiri as per our analysis. In mid August PBoC stunned the world by Devaluing Yuan – three times against the US Dollar to fix the peg at 6.3306. The PBoC devalued the Yuan by 4.50% against the US Dollar in three consecutive days. There was a global impact on currencies and commodities including Crude Oil as they further corrected to new lows. The US Dollar soared in August 2015.
^SSE COMP lost another 8.49 % on 8/24/2015 at close- this was the single largest daily fall in ^SSE COMP in its history – to close down by 8.49 %. Black Monday – 24th August 2015. Again ^ SSE COMP closed on 8/25/2015 at 2965 down 7.63 %. There was a panic in China and global equity and commodity markets –serious cuts were witnessed. Details of levels of some important global equity indices testing their multi-year lows is as per above. PBoC panicked to calm down Chinese Equity markets.
Even with the devaluation of Yuan - the ^SSE COMPOSITE was not buoyant. ^SSE COMP breached the important 3000 level and tested an intraday low of - 2851. The PBoC swung into action on 8/27/2015 and announced – cut in interest rate for one year tenure, cut in RR ratio and announced liquidity induction of US $ 200.00 billion (equivalent Yuan ) through two main Chinese Banks. There was calm at the Shanghai and Shenzhen equity markets today as ^SSE COMP closed today at 3206 after recovering from a whopping monthly low of 2851.
authorities may let CNY slip to these levels
of 6.45 to 6.66 to a USD. The might US $ moved
up almost against all currencies in the world
specially currencies of EMs.
On Black Monday (8/24/2015) ^DJIA also tested an intraday low of 15379 – down whopping 1081 pts on 8/24/205, but recovered to close today at 16528 (down 3.94 % ). S & P 500 also corrected to a low of 1867 but recovered to close was 1893 (down 5.48%). NASDAQ COMP tested an intraday low of 4292 but recovered to close at 4526 (down 3.82%).
investors pulled out US $ 190.00 billion in
the last 7 weeks from China, primarily from
the Equity markets. US $ 90.00 billion were
pulled out in July 2015 and in three week
July 2015 – US $ 100.00 billion have been
pulled out by the FIIs. They are a bit
disturbed over authenticity of Chinese data
especially on the annual GDP growth figures.
China announced its GDP growth for Q2 2105 at
7.5 % but global economists feel that China is
growing only at 4.00 to 5.00 % only. Plus the
devaluation of Yuan gives an indication of
pressures in China.
major European Equity markets fell by about
5.00 % at close ( CAC, DAX and FTSE ) on
8/24/2015. Europe STOXX was down by 7.33 %.
These indices recovered at close today.
Athens opened for trading on 8/4/2015 and the
index crashed to a new decade low of 615
and was down 22.93 % at the opening of trade
after a five week break till the close of the
trading hours. This was the biggest daily fall
in GD.AT after Greece became a member of EEC.
GD.AT corrected again on 8/24/2015 by 10.67 %
to a multi year low of -568 but
recovered to close at 624 today.
South African Rand crashed to 13.80 to a USD on 8/24/2015. Rand was worst performing currency in EMs after Brazilian Real. Brazilian Real was hit today to test a low of 3.6823 level against the US Dollar -which is a multi year low. Brazil is now officially in recession. There is a threat to its Sovereign Bond rating be cut to junk status by global rating agencies as Brazil faces a tough fiscal imbalance. Plus there is the China effect also in play – as Brazil exports iron ore and other metal ores to China. Chinese imports are down as its economy is slowing down.
tested to a low of 66.7325 of closed at 66.645
on 8/21/2015. This is fresh one year low for
the Indian rupee. INR recovered to close today
Gold moved up to USD 1171.10 pto at NY Spot on 8/24/2015. This was a 5 week high. Gold closed today at US $ 1135.40 up 3.58 % from the last month’s reference close of US $ 1096.20 pto. We remain bearish for Gold in September. Unless Gold starts to trade above US $ 1183.00 pto it will be bearish. Hence Gold should be bought only is it sustains US $ 1183.00 pto
Crude Oil prices corrected about 27.00 % in August 2015.
ENT Crude Oil February 2015 futures tested a six year low of $ 45.19 pbbl on 1/13/2015 at London ICE – lowest since April 2009. October 2015 futures tested a low of $ 42.23 at ICE on 8/24/2015. BRENT can test a level of US $ 40.00 pbbl in the next few months. BRENT October futures closed today at 53.97 pbbl
WTI Crude Oil April 2015 futures tested
a six year low of $ 42.51 pbbl on
3/18/2015. This was the first time since April
2009 that WTI Crude Oil futures were trading
at levels of below $ 50.00 pbbl. March 2015
levels were breached in August 2015. October
2015 futures tested a low of $ 37.75 ppbl
at CME on 8/24/2015. A fresh 6 year low. WTI
and BRENT have fallen for 8 straight weeks in
the international markets – at CME and ICE
respectively. This is biggest losing streak
since 1986. WTI can test a level of US $
35.00 pbbl in the next few months. October
2015 futures closed today at 47.30 pbbl
corporate sector had one of its worst years in
the fiscal year that ended in March.
Industrial output grew by a modest 3.2%
year-on-year in the quarter through June 30
compared with 4.5% in the same period last
year. GDP data for the quarter is due Aug. 31,
but on Aug. 17, Moody’s Investors Service
reduced its GDP growth forecast for the
current fiscal year to 7% from 7.5%, citing a
near 10 % deficient SW Monsoon season and
slowing momentum for reform. The Indian Govt
announced its GDP growth figures Q1 FY2016 at
We are again cautioning global investors to take profits home in equities or even book losses in equities and sit on cash. There will be a “tsunami” in the global equities and commodity markets in September through December 2015. The above lows mentioned in the update will be breached and one will see much lower levels. We will advise accordingly when to start buying equities.
are advised to square their long positions on
all commodities including Gold. We will advise
via special updates when to start buying
equity markets (including India) will correct
savagely from 1st
September 2015 to 14th September 2015 and so
also commodities. Hard Commodities are already
near their six or seven years low. Gold may
rally in the said period but will again be
hammered down by global bear cartel.
PLEASE BE PREPARED TO SEE ANOTHER BLACK MONDAY ON 14th SEPTEMBER 2015. TRADERS TO TAKE POSITIONS ACCORDINGLY ON THE FORTH COMING TSUNAMI.
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