Wednesday, June 23, 2010

Readings from Blogs

ECRI Weekly Leading Indicators : One of the Best

My Notes: The ECRI Weekly Indicators have been in a lot of news lately, since the indicator has been falling, suggesting that all is not well in the U.S. economy.

The following discussion is by Lakshman Achuthan and Anirvan Banerji, co-founders of ECRI:

A 63-country IMF study on economists’ recession-forecasting prowess concluded that “The record of failure to predict recessions is virtually unblemished.” In contrast, the IMF subsequently noted that ECRI “has actually had a very stellar record” of recession forecasting.

In August 2009, we said the recovery would be “at a stronger pace than any the United States has seen since the early 1980s.”

Its message today is quite simple: A slowdown in U.S. economic growth is imminent, but a new recession is not.

My Notes: This indicator is developed by two Indians. This fact is gratifying to all of us in India. The curent reading suggests that a slowdown in the USA. There will be some impact on India.



Baltic Dry Index Decline

Analysts are taking note of the recent 40% drop over the last month in the Baltic Dry (Shipping) Index, which is often seen as a leading indicator of global economic activity. (chart from

Notice that the BDI ‘bottomed’ in November/December 2008, prior to the March 2009 stock market bottom. The sharp recovery in the BDI preceded the 2009 stock market ’straight up’ recovery, though the BDI became rangegound between the 3,000 and 4,000 level… which is where we have remained for over a year now.

The weekly chart just broke a rising trendline at the 3,000 index value level last week, so we need to keep a close eye on that for any further signs of deterioration – which would be likely bearish for the global economy and equity markets.



Number Of Millionaires Hit 10 Million In 2009, No Word On Poor

According to the Merrill Lynch / CapGemini “State of the World’s Wealth” report, the number of high net worth individuals rose 17.1% last year to 10 million. Their total assets combined increased 18.9% to $39 trillion. The US, Japan, and Germany accounted for 53.5% of the world’s wealthy.

In regional and country trends:

After losing the least in 2008, Latin American wealth surpassed the 2007 levels.

Countries from Asia-Pacific region have higher growth rates than other regions.

HNWI population in Hong Kong and India increased significantly in 2009

Not included in the study is new information that 115 million of the world’s 245 million widows live in poverty. Also missing is the statistic that more than three billion people in the world live on less than $3.50 per day or the World Bank’s estimate that 1.4 billion people live below the poverty line.

The Merrill study is the kind of headline grabbing news that banks, brokerage firms, and business magazines like to give out. The data say that wealth is re-emerging again now that the global recession is over. Stock market prices and real estate prices have recovered. There are 10 million millionaires, a testimony to the ability of those with pluck or inheritance to live long and prosper.

But, in the meantime, there was not any word about the poor.


1 comment:

Saurabh said...

Respected Sir,

The way the Baltic Dry Index has fallen off a cliff, is a wake up call.

The crash in the stock markets cannot be far away. The impending fall is coming soon and will uncover the myth that the Indian markets are insulated from the world markets and that they will outperform.
I think that we will not only fall in line with the rest of the world, we will fall harder.