Euro Last Support or Hope :136


Last week ,The epicenter of many of  questions seems to be southern Europe, where Greece, Portugal, Spain and to a lesser extent the remainder of the so-called PIIGS (Portugal, Italy, Ireland, Greece and Spain) have flamed investor concerns that burgeoning public debt may significantly weaken investor demand for sovereign debt and exacerbate an already trouble budgetary crisis.

Many investors have taken to selling the euro is as a means by which to reduce exposure to these problem areas and/or speculate on one or more of these crises spiraling out of control.

-Just look at above chart :Weekly chart includes a powerful rally of Year 2009 and more recently and two-stage selloff, starting in the first half of December and picking up steam over the course of the past 3 ½ weeks as traders looked to capitalize on weakness stemming from the problems in Greece, Portugal and Spain.


Just watch 136 level.Three consecutive close below this level+ Weekly close will take to 131.70-130 level.

-If not breaks 136 & trades above 138 level will create buying upto 140-141 level.

-Best Strategy :Sell on Rise.

-Will update more very soon.

Updated at 13:10/8th Feb/Baroda

Must-Read Interview with Howard Marks

Barron’s had an awesome interview over the weekend with Howard Marks.  They made it the cover story for a reason.  If you missed it, you must immediately read it here.

For those that don’t know, Howard Marks is the chairman of Oaktree Capital Management ($77 billion under investment).  They focus on distressed debt and Warren Buffett is one of his biggest fans.  What I found very appealing was his use of sentiment in his overall market thesis.

He’s been in this game longer than I’ve been alive and whenever I see someone willing to share what they’ve learned, it is like Christmas.

Here are a few of my favorite quotes from the story and my take. (more…)

Indian bank stress tests expected to provide only superficial reassurance

It seems that bank stress tests are catching on. In the wake of the US tests, whose results were published in May 2009, and the less exacting European ones, whose results came out on July 23, India is poised to embark on stress tests too. However the Indian bank tests are likely to be more opaque than the recent European ones – and their results will have to be taken with a bigger pinch of salt, according to a recent guest blog post in FT Alphaville.


On July 27 the Indian Reserve Bank confirmed its intention to carry out stress tests on Indian state-owned and privately-owned banks in the hope of providing reassurance about the resilience of the country’s banking system. On the same day the IRB raised interest rates more sharply than expected – to 4.5%-5.75% – for the fourth time in a year, largely in response to higher inflation and a potentially overheating economy (GDP growth is expected to be 8.5%-8.6% this year and next).


Incidentally, as Stephanie Flanders pointed out in a recent BBC blog post, Indians no longer see their nation’s closed financial system as a source of weakness. It is increasingly preferring to cut itself off from internatonal markets.


RBI governor Duvvuri Subbarao admitted that India would be “learning on the job” as it seeks to review of capital, liquidity and leverage standards of the nation’s banks, the majority of which remain state-owned.


India’s banks emerged remarkably unscathed from the global financial crisis of 2008-09 despite suffering a liquidity squeeze. Only ICICI, India’s largest privately-owned bank, needed explicit liquidity support during the mother of all crises.


However, in a that FT Alphaville post mentioned above, Hemindra Hazari, head of research at Hyderabad-headquartered Karvy Stock Broking warned that the government’s proposed tests may end up being more spin than substance.


He painted a disturbing picture of the state of Indian banking, adding that New Delhi has good reason to keep both the results and the methodology of the tests under wraps.


According to Hazari, India’s banks have widely used accounting jiggery-pokery to disguise their true bad debt position and suggestedthat they are in a far worse state than they are likely to let on to the stress testers.


Hazari said that while India’s banks may have the trappings of strength – having avoided the “cancers of subprime lending and investments in dodgy sovereign paper” – hidden dangers lurk beneath the surface.


In particular, he noted that the quality of their asset bases is “extremely mixed” and that their non-performing assets surged by 23% in the fiscal year 2009 and by 28% in the subsequent year.


Hazari does not regard non-performing assets as a reliable gauge of asset quality. This is because from 2009-10, the RBI allowed Indian banks “to classify dubious assets as restructured standard loans which are not classified as non-performing assets and which require minimal additional provisioning.”


Hazari added:



It is this nebulous category of assets, which bankers insist are of sound quality but are having “temporary” cashflow problems that have suddenly surfaced and rest innocuously in the notes to accounts on bank balance sheets. (more…)

The coming economic crisis in China

By Jim Jubak

Jim JubakI think investors are worried about the wrong kind of crisis in China.

Worry seems to focus on the possibility of an asset bubble and the chance that it will burst sometime in the next two to three months.

I’m more concerned about a slide into a crisis that will be an extension of the Great Recession. That slide could begin, I estimate, sometime in the next 12 to 18 months.

I understand the worry about the possibility of an asset bubble in China. After all, we’ve just been through two horrible asset bubbles — and busts — in the U.S. and global financial markets. And a Chinese bubble is a distinct possibility, one that should certainly figure into your investing strategy.

But China’s economy and political system are so different from ours in the U.S. and those in the rest of the developed world — and its relationship to the global financial market so unique — that I don’t think we’re headed toward any kind of replay of March 2000 or October 2007.

A bigger worry is a long-term slide into a lower-growth or no-growth world in which nations strive to beggar their neighbors and all portfolios slump. As crises go, it’s very different but ultimately just as painful for investors as the asset bubbles that draw all our attention now.

To paraphrase Leo Tolstoy in “Anna Karenina“: Happy bull markets are all alike; every unhappy bear market is unhappy in its own way.

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