Rainer's Investment Insights

Last update: July 12, 2015 USA Economic Health Realities Beginning of 2015, the Federal Reserve (FED) had been expecting continued economic growth. But there was still no decision on the timing of an interest rate increase, which would be a first stop towards “normalisation” of monetary policies. The accommodative monetary policy has kept the purchasing power of its currency in a state of prolonged weakness for over six years.  Over 2014 and 2015, the USD regained much of its strength and position as the most sought after currency . As a result, imports have become cheaper, the risk of inflation stays very low, and the country experiences a large inflow of foreign investment.  Meanwhile the US recovery remains very much on track, helped by low oil prices – and America’s ability to make a success at “fracking”, which reduced its dependency on oil imports, though not necessarily its dependency on oil. Since unemployment fell below 6%, tensions among inve...

For two decades, Japan suffered deflation, stock market stagnation and exorbitantly high debts. Deflation meant that investors did not invest, savers did not save and companies invested anywhere else but in Japan.  That all ended in December 2012 when Shinzo Abe got a second chance at the helm of Japan's government  He initiated ground breaking reforms, which became known as ABENOMICS, focusing on how business is done in Japan.  Winning December’s snap election has added power to the PM‘s reforms, resetting values for its business and social culture, and pulling the country out of its deflationary cycle. The Central Bank of Japan, BoJ, launches an unprecedented program of vital liquidity, which rapidly weakens the YEN. Corporate earnings (locally and internationally) are growing in leaps and bounds and are now strong enough to put pressure on wages. That has initiated a round of inflation to finally heave Japan away from the threat of i...

PART FOUR Market Drivers: In-depth View INDIA Realities: India's Economic Health As a general comment we can say, Indian economic health has vastly improved and promises more for the next 5 to 10 years.  In 2013, still under the ‘old’ coalition government, the economy had run out of steam, just in the same way that the government had run out of ideas as to how to improve it.  Likewise, Indian stock markets had underperformed.  By early, 2014, the economy struggled keeping the pace. Change was in the air. With a general election looming, punters started to bet on the prospect of a new government and India’s stocks entered a strong recovery phase, despite global headwinds and in stark contrast to other BRIC nations, Brazil, Russia and China. Falling oil prices and inflation below 6% helped a more independent Reserve Bank of India (RBI) cut interest rates. This was well received by the markets, ...