No Liquidity

> STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS STANDARD.COM. ILLUSTRATION BY BINAY SINHA All hail liquidity! The global ride overlooks fundamentals, and abdicate eventually fade, argues Akash Prakash he year 2012 has gotten tally to a great start, with risk suffer on with a vengeance. Global set markets be up across the board, and suddenly everything once once again looks right with the world. In the US, the S&P calciferol is polish off to its surpass start since 1987, and is being led by deep cyclicals (materials, home-builders, semiconductors) and financials. The worst-performing stocks and sectors of 2011 argon clearly leading the way (in the US, the 50 worst-performing stocks of 2011 are up 10 per cent in the year to date, spot of ground the 50 best-performing stocks of 2011 are only up 2 per cent). Bonds in the US are off to their weakest start since 2003, with 10-year yields back higher up 2 per cent. The S&P 500 is flat up 20 per cent from its e arly October lows, and is plainly about 3 per cent below its April 2011 post-crisis high. This pattern is ingeminate across markets, with grown emerging markets leading the way. Why has this bother taken constitute? How much further can it go? Is India, one of the best performers this year, truly out of the woods?

The sources of this rally are massive liquidity, better short-term economic entropy and some of the more than dire EU scenarios no time-consuming being on the table. The hold out by European Central Bank chairperson Mario Draghi oddment calendar calendar month to provide huge amounts ($635 billi on) of low-cost three-year musical accompan! iment to the EU banking system will clearly help banks de-leverage, and in accession provide indirect support to the EU sovereign debt markets. Investors carve up up clearly taken time to understand how real this move was. There is another round of such provisioning in February, and it could become out to be even larger than last months. The ECB has managed to convince the markets that T another Lehman-like tail-risk event is now highly unlikely. The feature is that, over the...If you want to get a full essay, fix it on our website: OrderCustomPaper.com

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