The Great Printing Mania

The world economy of the day is driven by great printing mania of central bankers in the developed world.

Since the Post-Clinton era USA has tried to recover its economy from the twin blow of 9/11 attack and tech bubble burst by easy monetary policy. This Bush-era policies coupled with easy monetary policies by Mr. Greenspan created the Sub-prime bubble. The burst of the sub-prime crisis proved to be one of the worst disaster for the world economy. After Mr. Bush, Mr. Obama took over as president and Big Ben stepped into the shoes of Mr. Greenspan. Since then, the only official medicine for ailing US economy has been QEs. The federal reserve has expanded its balance sheet like anything and it appears they have reached the limit of it. It is almost four years since the QE mania started and the feeble growth the US economy is showing is only due to abnormal govt. spending in the country. Besides, the Fed seems to be attempting to recreate the same housing bubble through monthly mortgage buying program (QE infinity), which it is still trying to heal.

All other major central banks have followed Fed's footsteps. The ECB, the Japanese central bank, Bank of England- everyone wants to help their government print and spend. Once the USA has started the game, many are forced to follow the suit in order to maintain relative position in Currency.

But, this game can continue only till inflation is under control. With the ever expanding public debts and ever inflating balance sheets of  central banks, a natural follow up of this mindless printing could be inflation  spiral ling out of control. My belief is that, even central bankers are well aware of that. But the sad story of today is that everyone wants to live for the day. The incentive for making today a sunny day is so tempting that everyone wants to postpone the hard decisions for the future. So, let us dance in the tunes of the rock-stars of the day...the printing mania continues.

BUY TTML with a SL 27, TGT 30.45

Clearly TTML has broken out from the range with volume after having consolidated in the channel for long period. The 5 EMA has crossed 30 DMA and stock has closed well above it.
MACD cross over and RSI are also showing support for positive development.
The immidiate target for the stock stands at 30.45.

Sell BEL @ 1820,sl 1830, TGT 1800-1790

The uptrend in BEL that started from 20 th November has broken as we can see a
visible break in trendline. Also RSI is 69.58 and stochastic indicator is at a level
90.96 which are clearly indicating overbought condition. A 38.2 % retracement from
low of 1560 on 20 th November to 1870 of 4 th December can take the stock to a level of 1790 very easily. Day traders should go short @1820 keeping a stop of 1830,
just above the % day EMA.The target should be 1800-1790.

Nifty Shorter term Outlook-05/08/2009

Nifty has formed bearish hanging man pattern in daily charts for 2 days in a row.
There is high probability of trend reversal.

I think the 38.2% retracement level of the upmove which started at 3974and ended around 4724,can be reached.
The target level for nifty futures would be 4436.
keep stop loss at 4734.

Obama in Dilemma

U.S. president Barack Obama has opined that in spite of high fiscal stimulus and and so many bailouts economy will worsen .He has warned that the unemployment rate can go to double digit before things can improve (http://www.cnbc.com/id/28693884) .According to past experience we have seen that employment data is a lagging indicator of economy as it bottoms out after the the economy has already bottomed out.The economy defends upon the sentiments of the business organisations.though there may be available business opportunity the business firms are not confident to invest as they are not sure about the demand .Towards the end of a recession the availability of credit or liquidity becomes a secondary issue ,the major concern is the the lack of confidence that leads to less investment and a period of consolidation.On the other hand demand is enhanced by natural process that will help in a sudden rise in scarcity and consequent rapid growth in subsequent period.That is why in spite of this monetary measures taken by Fed has not been able to generate any significant improvement in the economic system till date .In this context the best way to go is increase fiscal stimulus(Keynesian principle) instead of providing tax cuts.Tax cuts will help in providing money available in the hands of consumers and business organisations.But do they have the confidence to spend at this moment where uncertainty looms around the entire economy ,when they are not sure whether they are going to have their job or going to loose their business tomorrow ?But the government has no such issues.Surely they are the only one who can ensure spending by fiscal stimuli that can boost demand and recover the economy .In spite of that we have seen that Obama has gone for $300 billion tax breaks in his stimulus plan .Here lies the dilemma of political system in a democracy .The government is elected by general people and to satisfy their mind Obama has to play a balance between revival priority and popular satisfaction.Obama has to balance this game.That will determine how fast America and the world will heal their wounds and recover to riches.God bless Obama!!!