Enough Fallen BRICs?

By: Boris Chikvashvili | Mon, Jul 1, 2013
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Over six Months ago we published, at this site, an article Falling BRICs where we have shown, clearly, that INR was destined to fall. Longer term (40 years) chart history was also provided as a background to indicate how destructive Indian Monetary policies were for Indian Rupee (USDINR).

We do not consider ourselves experts on Indian or BRIC Economies, even though closely following the news from those countries. All/Most of our conclusions/forecasts are based on predictive powers of our tools, which are based on worldwide capital flow cycle analysis.

BRICs To Fall
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As indicated above these currency pair forecasts are helpful and linked by money flows to other securities. Therefore the weakness in GOLD prices, for example, was pretty predictable if our INR forecast was correct. Of course size of the move cannot be directly read from these charts and requires use of other tools such as FIBO and AP ( Attraction Point analysis TM). From what we read in the above graph, we view the near future as follows:

STOCKS

The money flows favor Dollar for a while longer, which could flow into bonds or stocks.

Given severely, short term, oversold conditions in bonds, we think stocks may have some more downside into July. Any move to new highs would negate this outlook.

BONDS

Regardless whether they rise or not, we expect considerable flow of funds into what looks as attractive priced (opposite to YIELD) bonds. Many of the emerging market bonds have lost 13-30% in last 3-5 months and yields backed up to 5-7% range. I have advocated generational rise in rates already in 2008 article Interest Rate Bottom (Remember 30 year bonds have been undercut by only small amount in 2012).Therefore let's remember where the rates are going in general.

GOLD

It looks like, gold is washed out, but it could struggle into end of 2013 before bull renews itself.

Those low on GOLD in their portfolio need to start buying now, regardless.

Better yet, I would buy GDX/GLD as a proxy of future gold rise, as this ratio may bottom sooner.

DOLLAR

For us Dollar was bullish since 2008 and we never changed that opinion, even though internet is full of forecasts predicting Dollars Imminent Demise. Dollar Demise Will come , but it is not here yet.

Meanwhile KING DOLLAR is on the march.

CRUDE OIL

As long as economy is growing, even slowly, demise in OIL is hard to see. This is highly manipulated commodity and it's direction is heavily influenced by geopolitics and money flows into Dollar and GOLD as those often compete for the primary destination of the capital.

If you are not scared geopolitics and can watch it, then I would suggest NATGAS/OIL purchase as this ratio is badly oversold.

 


 

Author: Boris Chikvashvili

Boris Chikvashvili
borisc.blogspot.com

In short... I was supposed to be a theoretical physicist (Russia+Jerusalem Hebrew University, MS Physics, with distinction, toyed with QUARKS). Somewhere on the road to PHD I have discovered, first the Computers - at Carnegie Mellon University (MS EE, Fathered UNIX, adopted WINDOWS), and second Finance on Wall Street.President ITI,(Computer/Finance Consulting Firm) Consulted AT&T,IBM,SUN,CITIBANK,JP MORGAN, LEHMAN, MICROSOFT. Designed/implemented Trading Systems - BLOOMBERG LLP. There is nothing more to say professionally speaking.

Please Note: The opinions expressed here are only for education purposes and do not constitute the advice in any shape of form.

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