Wednesday, April 22, 2009

Markets playing a fiddle while Rome is burning down

Good news is that the markets are in a bottoming out phase.

The bad news is that the worst blow is yet to come and that has yet not been factored in.

Here're some aspects not factored in yet :-

- Impact of GM bankruptcy/ restructuring

- After the fictional profits in Q1, US banks will start reporting massive loan losses in successive quarter on the back of credit card and other loan losses. This is going the the final straw and break the back of many a banks, irrespective of what Tim Geithner’s stress test results might say.

- US GDP will remain negative through the whole of 2009. UK, China and Japan will keep sliding down the hill.The impact of this contraction on Indian economy, during rest of 2009, will be far severe than is currently being factored in.

- Indian economy growth slowdown will continue and we'll continue to report less than 5% GDP growth for all the quarters for calendar 2009

I believe the state of the markets now to be like the Nero who was playing a fiddle while Rome burned down.