-- Posted Tuesday, 26 June 2012 | | Disqus
KEY FACTORS TO WATCH IN JULY TO SEPTEMBER QUARTER
- Eurozone and how globe deals with the same.
- Iran and other middle east and north African geopolitical risk
- Category four and above hurricanes in the Gulf of the Mexico
- US economy and Chinese economy
- Interest rate cut or any liquidity increasing measures buy any of the key central banks.
- Stability or Uncertainty period in key economic zones in the world.
- Commodity prices
- Run up to US presidential elections
- London Olympics
The global sentiment on economy is very weak. Lower crude oil prices take between three months to four months for positive effect economy. Crude oil prices have fallen this quarter which if it continues till August will result in higher global consumption, lower budget deficit among major oil importing nations (not necessarily India) and a fell good factor on economy. Lower commodity prices this quarter will add to potential for higher growth over the coming quarters.
When the US president Barack Obama was nominated for a re run in the US presidential elections around that time crude oil prices started to fall. This cannot be coincidence. There is underhand dealing with hedge funds and other large crude oil speculators and Barack Obama.
Eurozone’s problems on global financial markets will fade and markets will not be dictated by eurozone. Eurozone nations and eurozone banks have already been downgraded to near junk status. More or less with passage of time a markets have factored in a reduction in eurozone nations. Any positive news on eurozone will result in short term bull run for euro/usd and gains for bullion, base metals, energies and stock markets.
China will be doing its bit to ensure that growth continues. Even a steady quarter on quarter growth rates will be positive for base metals. One can expect further reduction in interest rates in China.
Lower commodity price inflation will result in scope for interest rate cuts among all central banks. However any liquidity increasing measures by USA, UK, Europe and Japan will only increase speculative interest in commodities and will be reduce the positive effects of lower commodity prices. Central banks have to ensure that speculative interest in commodities does not increase substantially.
Iran
Our political view is that Iran and other rogue nations classified by USA will not be attached by armed forces before the US presidential elections. After the USA presidential elections if Iran does not bow to master USA then it will certainly be attacked. Crude oil sanctions has already crippled Iranian economy. Key will be how China and Russia play it out against USA and its NATO allies in the UN Security Council. Russia has veto powers and has never used it. Mr. Putin is a much more stronger Russian president (than his previous tenure). I would not be surprised if Russia veto powers in UN Security Council to prevent an armed attack. The chance of an attack on Iran by US forces aiding Israel are much higher at the moment. Geopolitics will ensure that investment demand in gold and silver continues to remain high.
USA political policy shift
The US policy has shifted to Asia and Africa. USA has got the approval of building a Naval base in Bangladesh. US companies will be exploiting the most of natural resources in Myanmar, Srilanka and Vietnam among other nations. They also want to neutralize china’s growing economic power and defence power. At the moment China is the only nation which has the potential to overthrow USA from its super power status. USA has been interfering more and more in internal matters of Asian nations.
The difference between earlier president George Bush and current president Barack Obama is that George Bush was clear as to what he wanted from any nation. Barack Obama is a back stabber and what he says never happens and what he does is never said. The chances of Mr.Obama continuing as the president of USA (from 2013) is very high. Asia can expect greater interference from USA.
To sum it up
I am bullish on global economy from the next quarter on the premise that lower commodity prices will necessarily translate into higher global growth. If this does start to happen then the world will enter a period of stagflation which could last well into end 2013.
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities reflect the views of the individual analyst, In no event shall Insignia Consultants or its employees have any liability for any losses incurred in connection with any decision made, action or inaction taken by any party in reliance upon the information provided in this material; or in any delays, inaccuracies, errors in, or omissions of Information. Nothing in this article is, or should be construed as, investment advice. Website www.insigniaconsultants.in
-- Posted Tuesday, 26 June 2012 | Digg This Article
| Source: GoldSeek.com
