Your SlideShare is downloading. ×
Earning  Season,  Interest  Rates And  Inflation To Make Markets Move Sideways And Volatile, Though With A Positive Bias
Earning  Season,  Interest  Rates And  Inflation To Make Markets Move Sideways And Volatile, Though With A Positive Bias
Earning  Season,  Interest  Rates And  Inflation To Make Markets Move Sideways And Volatile, Though With A Positive Bias
Earning  Season,  Interest  Rates And  Inflation To Make Markets Move Sideways And Volatile, Though With A Positive Bias
Earning  Season,  Interest  Rates And  Inflation To Make Markets Move Sideways And Volatile, Though With A Positive Bias
Earning  Season,  Interest  Rates And  Inflation To Make Markets Move Sideways And Volatile, Though With A Positive Bias
Earning  Season,  Interest  Rates And  Inflation To Make Markets Move Sideways And Volatile, Though With A Positive Bias
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Earning Season, Interest Rates And Inflation To Make Markets Move Sideways And Volatile, Though With A Positive Bias

549

Published on

In my expectation three words will be the most talked about words in global financial markets in 2-4-6 months time i.e. EARNINGS, INTEREST RATES, and INFLATION. The former (earnings) might help …

In my expectation three words will be the most talked about words in global financial markets in 2-4-6 months time i.e. EARNINGS, INTEREST RATES, and INFLATION. The former (earnings) might help markets to move higher (than today level) at-least during or till of earning season, as results beat expectation but the latter two (Interest rates and Inflation) will make markets move sideways and volatile (though with a positive bias due to occasional occurrence of positive macro data points and few larger companies declaring results after earning season).

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
549
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
15
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. 1 Earning Season, Interest Rates and Inflation to make markets move sideways and volatile Earning Season, Movement in Interest rates and Inflation to make markets move SIDEWAYS and VOLATILE in near to medium term (though with a positive bias due to occasional occurrence of positive major macro data points and few larger companies declaring results after earning season) In my expectation three words will be the most talked about words in global financial markets in 2-4-6 months time i.e. EARNINGS, INTEREST RATES, and INFLATION. The former (earnings) might help markets to move higher (than today level) at-least during or till of earning season, as results beat expectation but the latter two (Interest rates and Inflation) will make markets move sideways and volatile (though with a positive bias due to occasional occurrence of positive macro data points and few larger companies declaring results after earning season). Sideways are not only good but GREAT… What and where is the reason for the markets to fall? When macroeconomic numbers either come only up to the expectation or even slightly below expectation, markets do not go down but they trade sideways. On the other hand, new theories such as M&A deals or IPO filings emerges (as discussed in my previous article), and converts the sideways movement in the market into a market which is occasionally sideways (even this occasion has positive bias into it) and most of the times trends upwards. I personally believe sideways are great, meaning markets are not willing to give up any ground, or even if they give up any ground during some trading sessions on the 30th September, 2009 back of these famous two words called “recovery worries”, ultimately they recoup all these losses during one trading session, and end up making higher high. In my views, SIDEWAYS are just too good for the markets. Sideways is a victory for the bulls. What has been happening since 9th March 2009 is, both the markets are trending higher, or remaining sideways, then again moving higher and the sequence continues. Vinit Tulsyan http://vinittulsyan.wordpress.com
  • 2. 2 Earning Season, Interest Rates and Inflation to make markets move sideways and volatile I continue to believe that markets will continue to behave in the same fashion in near to medium term; though the only difference could be that VOLATILITY can be the integral part of this sideways movement. The belief stems from the fact that once the euphoria around earning season ends (discussed below), and the debate on Interest rates (reverse in federal banks policies all around the globe; obviously led by Federal Reserve) and subsequently on Inflation takes center stage. The sideways coupled with volatility could have positive bias into it, meaning at the end of the period, I feel markets will be higher than where it stands today. The caveat is that there might not be huge difference than today’s level (not at-least the kind of difference one has witnessed in between March and end of September). Earning season becomes the most powerful factor for the markets to move either ways Continuing with my previous article on new theories leading the market higher, M&A activities and Currencies, I strongly believe that whether it’s the emergence of new theories such as M&A deals or IPO filings, only improvement in the actual culprits of this economic turmoil and the subsequent and recovery in the after effects of these turmoil will lead the markets higher in near to longer term. In my opinion, especially in US, one event, which is not a one day affair, to which financial markets around the globe give a knee-jerk reaction (like Hosing, Retail, consumption, manufacturing data, payroll data, unemployment figures, fed/treasury announcement, exports, PMI data etc.), and always takes the centre stage (irrespective of the economic cycle one is into) along with the to move the markets either ways for a slightly longer period is earning season. 30th September, 2009 Each of the DOW component or technology majors within NASDAQ is so big, that they are considered to be the representative of their particular industry. And when they are expected to announce results, news on M&A, upgrade/downgrade their earnings expectation going forward, provide a outlook on the economy, markets or market participants then stops looking at any other parameters but to start discussing about what a particular company on a particular day is expected to deliver. Vinit Tulsyan http://vinittulsyan.wordpress.com
  • 3. 3 Earning Season, Interest Rates and Inflation to make markets move sideways and volatile Significance of earning season for Indian Markets – I believe it’s’ insignificant Earnings followed by important macro data announcement during the earning season, wil lead the markets in the near term. Though, I have observed that this is not particularly true for Indian Markets. Despite so much of aura being created for Indian earning season, I have observed that it’s the results delivered by US majors, which ultimately ends up driving Indian Markets, not our own companies results. There might be few exceptions here and there but largely, I continue with my strong stance (since 10th March 2009) that Indian Markets on the back of less or no news (barring one or two occasion, to which Indian markets reach only for couple of hours or only during that day) will continue to react to news flow arising out of developed economies (especially US), not necessarily developing economies. INTEREST RATES and CURRENCIES to become the biggest reason for the equities markets to move SIDEWAYS and have VOLATILITIES; leading to money moving into Safe Heavens as well i.e. GOLD, TREASURIES, DOLLARS In my previous article, I discussed whether currencies will play the spoilsport role in equities rally all around the globe especially US; here I focus on Interest rates and impact of its movement on equities. I personally believe that once the euphoria around earning season ends in developed economies and in India, debate and focus on action to be taken by the federal banks all round the globe with respect to Interest rates and subsequently its impact on INFLATION will take center stage. And the speculation around reversing the low 30th September, 2009 interest rates policy by federal banks (especially US, followed by European economies) and subsequent expectation of an inflationary environment in the medium to longer term will make markets volatile and move sideways (but with a positive bias). I expect that the decision to reverse policies on Interest rates could take place sooner rather than expectation of market participants. I also believe within emerging markets India could be one country where the RBI, starts increasing interest rates much sooner Vinit Tulsyan http://vinittulsyan.wordpress.com
  • 4. 4 Earning Season, Interest Rates and Inflation to make markets move sideways and volatile than other emerging or developed markets. Couple of reasons could be; RBI position to remain ahead in the curve than others in formulating policies on macroeconomic front, RBIs comfort and confidence of having enough liquidity with in Indian financial system, providing a helping hand to Indian Rupee against US Dollar, RBIs comfort with respect to expected inflationary environment etc. US might become the laggard on the front, with Federal Reserve intentionally wanting to keep the interest rates low in order to inflate home prices. I actually expect the dollar to be lower for now, but will start stabilizing once FED reverses its policy on Interest rates or on quantitative easing. At the same time I strongly believe, US will have to support the dollar in order to attract debt investors, and when that happens, in my view there is going to be a trade-off between equities, dollar, and interest rates. Money flowing into dollar would simply mean, lower allocation for equities, interest rates moving northwards, and in-turn treasury securities will start looking as a safe haven investment once again; ultimately leading to a more inflationary environment (about which most of the experts on US economy feel that Inflation will start kicking in starting next year). The Summary So in my expectation three words will be the most talked about words in global financial markets in 2-4-6 months time i.e. EARNINGS, INTEREST RATES, and INFLATION. The former (earnings) might help markets to move higher (than today level) at-least during or till of earning season, as results beat expectation but the latter two (Interest rates and Inflation) will make markets move sideways and volatile (though with a positive bias due to occasional occurrence of positive macro 30th September, 2009 data points and few larger companies declaring results after earning season). Thanking You, Warm Personal Regards, Vinit Tulsyan http://vinittulsyan.wordpress.com Vinit Tulsyan http://vinittulsyan.wordpress.com
  • 5. 5 Earning Season, Interest Rates and Inflation to make markets move sideways and volatile Click on the link below to have access to my earlier articles Date Titled Link The Worst period in Financial Markets History (OCT 2008 till March 9, 2009) http://vinittulsyan.wordpress.com/2008/10/24/t October 24, 2008 THE WORST IS NOT OVER YET? YET TO BE SEEN!! (PART:I) he-worst-is-not-over-yetyet-to-be-seen-part-–-i/ http://vinittulsyan.wordpress.com/2008/10/26/t THINGS WILL GET WORSE BEFORE THEY GET BETTER – PART October 26, 2008 hings-will-get-worse-before-they-get-better- I CONTINUED… continuation-to-part-i/ http://vinittulsyan.wordpress.com/2009/03/02/ March 2, 2009 MORE BAD NEWS IN STORE THAN GOOD more-“bad-news”-in-store-than-“good-news”-–- vinit-tulsyan’s-views/ http://vinittulsyan.wordpress.com/2009/03/03/ GETTING BACK TO REALITY: ARE THERE ANY INVESTMENT AVENUES getting-back-to-realities-are-there-any- March 3, 2009 LEFT FOR INVESTORS IN TODAY’S WORLD? avenuesoptions-left-for-investments-in-today’s- world/ http://vinittulsyan.wordpress.com/2009/03/08/ GOLD: GOLDEN FORTUNE: LONG GOLD / SHORT INR: BUOYANT LONG March 8, 2009 gold-fortune-long-gold-short-inr-buoyant-long- TERM OUTLOOK term-outlook/ Vinit Tulsyan http://vinittulsyan.wordpress.com , 2009
  • 6. 6 Earning Season, Interest Rates and Inflation to make markets move sideways and volatile Emergence of the best turnaround ever witnessed in Financial Markets History (since March 9, 2009) http://vinittulsyan.wordpress.com/2009/03/10/opti OPTIMISM PLAY: BULLS ARE BACK ATLEAST FOR NOW WITH mism-play-bulls-are-back-atleast-for-now-with- March 10, 2009 MARKETS TRYTING TO FIND A BOTTOM ON THE BACK OF HOPE markets-tryting-to-find-a-bottom-on-the-back-of- hope/ http://vinittulsyan.wordpress.com/2009/03/12/hop March 12, 2009 HOPE: The rally lives on…BUT…they still are bear market rallies e-the-rallies-lives-on…but…they-still-are-bear- market-rallies/ http://vinittulsyan.wordpress.com/2009/03/16/fadi March 16, 2009 FADING DARK CLOUDS…BUT…ITS’ STILL NOT BRIGHT ENOUGH… ng-dark-clouds…but…its’-still-not-bright-enough…/ http://vinittulsyan.wordpress.com/2009/03/19/fom FOMC SHOCKER… UNPRECEDENTED CAMPAIGN…MASSIVE March 19, 2009 c-shocker-unprecedented-campaignmassive- QUANTITATIVE EASING… quantitative-easing…/ http://vinittulsyan.wordpress.com/2009/03/22/india March 22, 2009 INDIA & CHINA: “LOVE US, HATE US BUT CAN’T IGNORE US” -china-love-us-hate-us-but-cant-ignore-us-2/ THE 7US$ AND 6:1 (AGAIN 7) D/E RATIO PUSH FOR A 7% RALLY ON http://vinittulsyan.wordpress.com/2009/03/23/the- March 23, 2009 WALL STREET; BUT WHERE FROM NOW; IS IT A SIGN OF 7us-and-61-again-7-de-ratio-push-for-a-7-rally-on- CHANGING TIMES? wall-street-is-it-a-sign-of-changing-times/ http://vinittulsyan.wordpress.com/2009/05/08/stres STRESS TEST: CAT OUT OF BAG: US FINANCIAL INDUSTRY REPORT May 8, 2009 s-test-cat-out-of-bag-us-financial-industry-report- CARD: MORE POSITIVE THAN NEGATIVE card-more-positive-than-negative/ Vinit Tulsyan http://vinittulsyan.wordpress.com , 2009
  • 7. 7 Earning Season, Interest Rates and Inflation to make markets move sideways and volatile http://vinittulsyan.wordpress.com/2009/05/18/elect ELECTION 2009: GAME CHANGER FOR INDIA, CHANGE IN ion-2009-game-changer-for-india-change-in- May 18, 2009 PARADIGM FOR INDIAN POLITICS, CORPORTES, ECONOMY, PEOPLE paradigm-for-indian- OR INDIA AT LARGE politicscorportespeopleeconomy-or-india-at-large/ http://vinittulsyan.wordpress.com/2009/08/13/conf Confusion persists with conflicting data points BUT in my view this usion-persists-with-conflicting-data-points-but-in- August 13, 2009 confusion will take this market even higher in medium to my-view-this-confusion-will-take-this-market-even- long term higher-in-medium-to-long-term/ http://vinittulsyan.wordpress.com/2009/09/28/new New theories emerge as the markets heads higher. Does M&A -theories-emerge-as-the-markets-heads-higher- September 29, activities signal something? Will currencies play the spoilsport for does-ma-activities-signal-something-will-currencies- 2009 this rally in medium to longer term? play-the-spoilsport-for-this-rally-in-medium-to- longer-term/ Earning Season, Movement in Interest rates and Inflation to make http://vinittulsyan.wordpress.com/2009/09/29/earn September 30, markets move SIDEWAYS and VOLATILE in near to medium term ing-season-movement-in-interest-rates-and- 2009 inflation-to-make-markets-move-sideways-and- volatile-in-near-to-medium-term/ *** Vinit Tulsyan http://vinittulsyan.wordpress.com , 2009

×