macroeconomic analysis

i don't usually do fundamental analysis but i guess its good to analyse the underlying factors at what drives the markets once in a while. i'll be giving my opinions on the happenings around the world, and the possible outcome in the near future. for those who are unsure about investment opportunities, maybe it would be worth a read.

1) monetary policy in the US
central bank is increasing money supply, eventually, prices are going to increase due to inflation. however, the effects of inflation are not yet seen, or are not that drastic as of yet. inflation may be imminent, if the monetary policy keeps up.

2) shift of government investments
other governments around the world are aware of this situation and are pulling part of their investments out of the US treasury bonds. this is because the US dollar value has slid more than 11% compared to other currencies. bonds are essentially affected by currency values. as a result, they will have to invest in other instruments to ensure that part of their US investments in the US treasury bonds are hedged against the currency slide. instruments we are looking at are mainly commodities.

3) why commodities
commodities are priced in US dollar, and if inflation does set in, the value of the US dollar is going to slide further. as a result, the prices of commodities has to go up, hence a good hedging tool. besides, countries like china (a rising power) will want to acquire resources that they control so that they can be self reliant. with their recent purchase attempts, it shows that china has been strategically investing in its future growth.

4) where is the potential
the potential is definitely in commodities, as well as crude oil. the demand for oil will begin to increase once the economic crisis is over, and speculators are already pushing prices up bit by bit. i guess they are pretty much looking to push it up to $80 per barrell, and possibly $100. also, the potential also lies in asian economies, mainly hong kong, china, india, probably singapore.the money flow is now coming to the east asian region, so it is a good location for an investment.

there are still other factors that points to why we should look into these areas. definitely, when the recovery comes in around 4 years or so, the market leaders will definitely come from asia, and most likely, china.

for more investment opportunities, feel free to contact me :: es_mc2@hotmail.com