1 The Rally Returns
Last couples of days were about forced selling, which actually let my confidence shattered that whether
I am on the wrong side of the trade but GDP data from US have more than put my confidence back on
track. I still continue to believe that all emerging markets (including our own Indian market) Indian
markets will continue to move on news coming out of developed market especially US. And what more
evidence than the selloff in all the emerging markets (more evident from a drop in MSCI) on the back of
pullback in developed market, mainly United States. 30th October, 2009
US stocks rallied as the GDP grew the fastest (3.5%) in last two years against a drop of 0.74 and 6.43% in
two previous quarters. GDP growth was mainly fueled by consumer spending, which actually shows off
in GDP numbers. The U.S. economy returned to growth in the third quarter after a yearlong contraction
as government incentives spurred consumers to spend more on homes and cars. The turnaround in
residential investment, which added to GDP for the first time since 2005, was also a bright spot,
although it remains to be seen how much of that improvement was linked to government efforts to
prop up the housing market.
Vinit Tulsyan http://vinittulsyan.wordpress.com

2 The Rally Returns
GDP Break Down (%) Q209 Q309
GDP Growth 0.7 3.5
Real personal consumption expenditures 0.9 3.4
Durable Goods 5.6 22.3
Non Durable Goods 1.9 2.0
Services 0.2 1.2
Real nonresidential fixed investment 9.6 2.5
Commercial Real Estate 17.3 9.0
Equipment and software 4.9 1.1
Real residential fixed investment 23.3 23.4
Real exports of goods and services 4.1 14.7
Real imports of goods and services 14.7 16.4
Decrease in Private businesses inventories (US$ bn) 160.2 130.8
Source: US Dept. of Commerce
The best part of this GDP data is not the ones which grew mainly on the back of support from govt., but
areas such as Non-Durable Goods, Services, Commercial Real Estate, Equipment & Support and decrease
in private businesses inventories. The growth in these areas lets one believe that the consumers
spending is visible (though slowly).
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Thanking You,
Warm Personal Regards,
Vinit Tulsyan
http://vinittulsyan.wordpress.com
30th October, 2009
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Vinit Tulsyan http://vinittulsyan.wordpress.com