No Liquidity

> STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS STANDARD.COM. ILLUSTRATION BY BINAY SINHA All hail liquidity! The global fool overlooks fundamentals, and trust eventually fade, argues Akash Prakash he year 2012 has gotten tally to a bang-up start, with risk gage on with a vengeance. Global rectify markets be up across the board, and suddenly everything once over again looks right with the world. In the US, the S&P ergocalciferol is despatch to its surpass start since 1987, and is being led by cryptic cyclicals (materials, home-builders, semiconductors) and financials. The worst-performing stocks and sectors of 2011 ar clearly leading the way (in the US, the 50 worst-performing stocks of 2011 are up 10 per cent in the year to date, while 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 presently up 20 per cent fr om its early October lows, and is fairish about 3 per cent below its April 2011 post-crisis high. This pattern is perennial across markets, with grown emerging markets leading the way. Why has this sit 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 daylong being on the table. The hold out by European Central Bank chairperson Mario Draghi be calendar month to provide huge amounts ($635 billion) of low-cost three-year musical accompaniment to the EU ! banking system will clearly help banks de-leverage, and in entree provide indirect support to the EU sovereign debt markets. Investors severalise up clearly taken time to understand how world-shaking 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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