Russia to Play Catch Up

Bank of Russia was Hiking to Protect the Ruble When Everyone was Easing Policy...



...Not a Surprise that Russian Equities Lagged



I bought RSX eventhough it has rallied significantly from the lows. It is still cheap and will play catch up in the reflation theme. The ruble is now on firm ground and that should help the central bank to aid the recovery.

Cycle dominates Seasonals

No September Effect in 2003




No January Effect in 2008



A number of articles were floating around in August highlighting the negative seasonals for September. Looks like September 2009 will turn out just fine, just like 2003.

India's Water Crisis and the Stock that will Benefit

When the rains fail

Jain Irrigation is the stock I am betting on.

INR Looks Cheap on a Trade-Weighted Basis

INR: 36-Country Nominal Effective Exchange Rate




INR: 36-Country Real Effective Exchange Rate



My initial view was that the US recovers first. That is clearly not the case. In the initial phase of the recovery, both - rising risk appetite (equity rally) and interest rate differentials - should work against the US dollar. The rupee looks cheap and December 2009 forwards are pricing in rupee depreciation of about 1%. Both these factors should help if the dollar starts to strengthen.

Relative Value in Russian Equities

‘Dummy’ Day-Traders Whipsawing Russia Signals Buy

Completely agree. If this recovery is for real, Russian equities could deliver stellar returns.

Food for All Palates

Manufacturing ISM: Looks Like a "V"




Existing Home Sales: Looks Like a "U"



If you look enough, you will find data that supports your view. That is why my endeavour is to find "view neutral" investment ideas. There were plenty of these at the start of the year with several asset classes discounting Armageddon. The low lying picks are gone now.

SENSEX vs. USD/INR: NEGATIVE CORRELATION ALIVE AND KICKING

This negative correlation has been alive and kicking for a long time now. The mid-oughts' bull market in equities coincided with global dollar weakness. During the crisis, the ultimate safe haven status of US Treasuries provided a further boost to this inverse co-movement.

The big question is what happens to the US dollar as the global economy recovers. The answer to that depends on whether the world can decouple from the US. I remain sceptical of the decoupling argument, at least in the near-term.