Apparently not a single analyst out of the 35 polled by Reuters before the data had expected a negative reading in fact they were expecting the economy to grow by 0.2 %. I mean…. what ? The reality is we have been expecting and forecasting a contraction so as far as we are concerned no surprises there. Absolutely NOT! It’s mostly analysis based on common sense really. One doesn’t have to be a ROCKET Scientist to make that Conclusion especially if you were to look at the scale of damage done to the real economy by the CRISIS. You know sometimes I wonder if one should even bother listening to these big guys who get PAID big BUCKS and become a market GURU if they get it right just ONCE. This is why I keep saying to my friends and colleagues “Do it Yourself ” (DIY)… least try it. I mean what’s the worst That Could Happen? We all make mistakes but that’s not the POINT. How many of us have LEARN from it? I am beginning to wonder if we have really LEARNT anything from this CRISIS or may be WE don’t want to LEARN or who cares as long as we can keep making MONEY?

Even though things are GETTING and yes looking better. I still have a lot of questions and some of them still worry me.

Here are some of them:

– Banks (some of them ) are now making money but on the other hand they are still loosing money a lot of money each quarter on commercial real estate, credit card loans, consumer loans among other things. Most of the money banks have made is on their Investment Banking business but not on retail or on traditional banking business. And I am glad some of our analyst friends are beginning to notice that. Although things have gotten better but the PROSPECT isn’t that BRIGHT especially if you consider that we are mostly probably heading into a JOBLESS recovery and a recovery that will mostly likely be slow paced.

– The whole SYSTEM has managed to survive because of the LIFE LINE given to it by various Governments from around the World. The markets have gone up and I believe there are two main reasons for it. First- Because they were so badly beaten up that they could only go up; second – Stimulus package(s) have delivered just look at China, India, Korea, France, Germany and others for example.  Although many still doubt that it has but I have no doubt in my mind that it is delivering and this is why we have supported them even though it was not PERFECT. Having said that, we are now seeing a building up of Asset Bubble in the economy (especially evident in China) which needs to be monitored and controlled. My concern is how able and capable the central banks are in making sure the excess don’t build up and CLOG the system again. The other question is do we really know how to price an ASSET correctly or fairly without either over or under PRICING IT? Until and unless we do, we will keep seeing ASSET Bubble Building UP in the SYSTEM. Central banks around the world will have to learn to monitor and supervise asset prices.

– We have still not addressed the SYSTEM RISK ..TOO BIG TO FAIL issue. There has been a lot of TALKS from various corners but no real PLAN.

– The REGULATORS are talking a LOT but DO they really KNOW how to best regulate the MARKET ? They have so far played the BLAME GAME along with Government but do they have what it takes to get things right this time?

– It’s hard to envisage a situation where the WORLD starts growing at the Pre-Crisis levels. So may be the market needs to take a BREATHER?

We have been expecting things to get BETTER in H2 of this 09 so again there are no surprises for us but I believe some of us are getting too or shall I say overly optimistic. Which is not necessarily a bad thing because we do need the AVEARAGE FOLKS on the MAIN STREET to feel confident because CONFIDENCE is KEY to all this. But the PROBLEM with CONFIDENCE is that it can disappear in NO time. So we have to be CAUTIOUS. I must say I am beginning to like TRAFFIC Jams in big cities especially in CITIES like Dubai because it does give me CONFIDENCE that things are looking much better and people are feeling good. And I think it’s important that we look at beyond the numbers and this is why I keep saying to my friends and colleague ALWAYS look at the BIGGER picture and the STORIES behind the numbers. DIG DEEP and not get carried away by listening to the NON STOP sound bites that we get from the MEDIA or the market. I personally get a bit SICK and TIRED of a minute by minute analysis of the MARKET repeated over and over AGAIN on news channels but I do know that I have a CHOICE and I can SWITCH off my TV if I want to. And the reality is we always have a CHOICE (in most cases) so next time when I loose or make MONEY I know it was mostly because of the DECISIONS I made and the options I choose.  As someone said markets are run by human ideas and there is no certainty as to how it will react to an action or in action but you always do  feel PROUD if you get it right and hope that you have learnt something good from your mistakes if you got it wrong.


  1. Our thinking about the econom is harmonious. Here are some of my thoughts:

    There are too many uneducated “experts” in the media and on the minute by minute TV. They are unqualified to be talking about macro and micro economics, yet they pretend like they can pontificate about very sophisticated concepts and how the market will react and trade. It requires a great deal of discipline to tune them out and realize they are spouting opinions, nothing more.

    – A year ago, the country was falling off of a cliff. Stimulus was introduced to cushion the blow and help us get back on track. That is the purpose of stimulus. It worked. It’s working. It’s not going to work as good as it could have, nothing ever does. It’s a government effort after all and it had to be done quickly. Has everyone forgotten that we were collectively screaming for something to be done? Now they are criticizing the stimulus, as if it is not doing anything at all. It is like lighter fluid to help start a fire. Nobody in their right mind believes that lighter fluid sustains a fire. ALL evidence is pointing to the fact that the recovery is underway. Have a little faith that this most productive economy on earth is gaining it’s stride. The rest of the world is doing their part as well.
    From the Economist (October 30): Temporary effects aside, growth in the third quarter reflects the dynamics of a genuine recovery. Exports and equipment investment both rose. Companies ran down inventories at a slower pace, a contributor to growth that should continue for at least two more quarters.

    – Earnings, from some of the most important companies, were stellar. And, their forecasts for next quarter have been positive. We should stop asking them about 20 quarters from now. Last quarter, this quarter and next quarter are pretty good proxy’s….especially from where we have come. Progress is incremental, and we’re getting it. Sure, cost cutting has been a main reason for some of the better earnings. No surprises here; cost cutting is prudent in a recession and it is stimulative too. Growth will follow; it is like addition by subtraction. It is just a matter of time now. If we were still falling into a recession, earnings would not be improving. The talking heads should be celebrating that.

    – Unemployment lags, every economist knows it like they know their name. It’s econ 101. We need to stop asking floor traders, 1 minute after weekly unemployment numbers are announced, what the unemployment numbers mean and what impact they are going to have on the market. Unemployment will improve – not like last time, or the time before – like this time.

    – “They” wanted a pullback and as the saying goes “be careful of what you ask for”…we’re pulling back. When “they” were screaming for a “healthy” pullback, it was to let the trillions on the sideline enter the market. Buy on the dips, nothing goes straight up, etc etc etc. Now that we are pulling back, why are the same people who have been screaming for a pullback acting like it is the end of the world? None of these people predicted the crash, so why do we want to know what they have to say now? I know there were 1 or 2 people who accurately predicted the recession. All I can say is that a broken watch is right 2 times a day. Of those people who predicted the recession, not one of them has made 1 accurate prediction since that call. They have been wrong 100 times to the one accurate call. I do not understand why we allow them to move the markets?

    – Consumer confidence slipped in October. I did not find that surprising, did anyone else? It made sense, so I do not understand why it spooked the market unless too many people in the market don’t understand economic fundamentals. GDP improved in Q3, housing is improving, unemployment is slowing, earnings are getting better. All metrics reported at the end of the month. Consumer confidence was reported to slip for the month of October, which again, makes perfect sense since none of the improved metrics are reported until the END of the month. Doesn’t it make sense that the consumer’s sentiment is negative until these month ending facts are reported and absorbed?

    Positive attitudes are contagious, especially compbined with conviction and discipline.


  2. Hope you are well and having a very good weekend.

    I wanted to take this opportunity to thank you for some of your very interesting observations and thanks again for sharing it. I appreciate it.

    Picking up on a couple of your very interesting comments especially on ” I do not understand why we allow them to move the markets” I guess this is mostly because we live in the world of SOUND BITES and I believe this is why some ANALYSTs have the capacity to move the market and unfortunately this is how the market works.

    We have folks who are either too optimistic or way too pessimistic. Take for example the same analysts who were forecasting the UK economy to get back to growth in the 3rd quarter are now being too NEGATIVE on the PROSPECTs for UK economy but the reality is they need to understand that they were wrong because their assumptions were WRONG period. We are confident that UK economy will get back to growth sooner rather then later but UNLIKE them I was not expecting the UK economy to get back to growth in the 3rd quarter. Also I never bought the First IN FIRST OUT idea that was circulating in the market some months ago and I am glad I disagreed.

    The economy needed a LIFELINE and even though stimulus package was not perfect I had no doubt in my mind that it will Deliver ( I did write a Piece on my BLOG around March titled ” Getting The Patient Out Of Intensive Care – The Economy” ) and it’s delivering but some of the BIG names in Wallstreet were extremely negative. Things are getting BETTER but mostly on Government support and I believe the GOVTs should not RUSH into exiting because the timing of the exit will have to be right. Nothing should be taken for granted and I believe the road ahead is going to be uneven and bumply also I know that the POLICY makers will most likely SLIP UP at times and thats the REALITY and we will need to factor all this GOING FORWARD. This can only be achieved if we apply some COMMON SENSE. Also I believe going forward we are going to see some mixed data come out and this is I why I keep saying to my friends and colleagues we are probably not done with Volatility yet but let’s see.

    Once again thanks and let’s keep in touch.


  3. I believe that the World is in horrible shape. I feel that if we knew the truth it would not be easy to handle. There are more shoes to drop. The biggest problem is that the entire banking system is connected. They
    have to heal and when money is free and you can lend it out or buy
    Government Bonds; the banks will hopefuly make more than they write off. There is a deflation in Real Estate Assets and inflation in commodity
    prices. This is hard to balance and I only hope things will turn out
    fine. It would be much nicer if the money spent on Wars was put to good use. It would be a good feeling to the entire world it the US got the
    hell out of the Middle East.


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