High yield bonds (funded by multiple rounds of QE) will definitely put pressure on the global financial system this year. I believe over $1 trillion of QE went into energy related bonds (in US and Europe), and nobody had thought of $30 oil plus strong US Dollar. Euro and Rupee/INR will be at risk from a stubbornly strong US Dollar. Zero debt companies with substantial earnings in USD like Google, Infosys, McDonalds maybe the safest places in market in 2016. Stay long on USD. Energy and Materials stocks should be handled only by advanced traders. There maybe many sharp corrections and short-covering rallies.
Tag Archives: INR
Iran Oil Deal
On 24 Nov 2013, Iran, USA and five other countries struck a deal aimed at curbing Iran’s nuclear programme in exchange for an easing of the sanctions against Iran. This may have significant implications for India which was Iran’s second-largest importer of oil. The easing of sanctions against Iran should result in lower oil prices, which will benefit India. However, as global demand for Iranian oil increases, Iran will become less dependent on India, and may stop accepting Indian rupees as part payment for oil and may favor trade with countries paying fully in US dollars.