Next Decade Belongs to Bulls

Hello friends. I hope you're doing great and the markets and the markets are treating you well.

Like I've said in my video last week, My September Trading Blueprint, that September normally tends to be a bullish month, at least the third and the fourth week of September are, and you are seeing the way the Nifty is climbing to new highs. Markets are heading into records and portfolios are basically getting a bullish boost in valuations.

So in this video, I want to bring you further good news. But this is a big picture kind of a video. It's not something that is likely to happen to you tomorrow morning or day after tomorrow morning, but the effect, the impact is undeniable.

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You see politics and money, especially politics, money, and markets, are very tightly knit correlation and asset prices are significantly impacted by the combination of money and politics.

And since I deploy what I call the 360 degree worldview to analyse financial markets and trade them, I feel it is only fair that I share with my viewers, my view of one I have read in the recent past in the public domain.

You see US President Joe Biden has made an announcement, which is extremely exciting, shocking, in your face, all at the same time. This kind of a shock impact is something that John Fitzgerald Kennedy created when he announced that he was in favour of pulling US troops out of Vietnam. He was in favour of a more peaceful society, a more peaceful world, and he was in favour of pulling out troops from Cuba as well.

President Joe Biden has bitten the bullet and gone the whole hog. Media interviews have suggested that he is of the opinion that the US should stop intervening in foreign countries and let those nations determined their own political and military and financial fate for themselves. The US will then on focus inwardly to make America great again to generate jobs to basically look after its own financial interests.

Now, this is a big, a big turnaround, a big U-turn from the policies followed by the US and naturally, like I said, politics, money, and financial markets are in bed together. So I want to analyse for you, how it is likely to make an impact to your portfolio.

Item number one. Wars are expensive and they create deficits. So deficits should come down to that extent, it might also be initially construed that the US is losing its dominance as a military power and as a global superpower. To that extent, the dollar might weaken initially.

But once you plug all these drainages in the dollar, which is military spending a troop deployment, etcetera, etcetera, you will realise that it's even better. If the dollar is to weaken emerging markets, including India, initially, will benefit because our external borrowings in US dollars will become more serviceable and therefore relatively easier to repay.

Remember the 1997 Southeast Asian currency crisis was triggered by a rising dollar. So if you are likely to see a dollar weakening because the American share in the reserve currency basket, which by the way has been falling since the last three years. The US was 75% of the global currency reserve barely four years ago. Now it is below 70%.

So to that extent, asset crisis will rise, including equity markets. What will rise the most? Bullion. Why? Because the purchasing power of fiat currency, paper currency will erode and bullion will be a direct beneficiary.

Crude oil, natural gas and base metals? Not so much. I'll come to each one of them individually. Base metals will depend on the supply and demand and I have been of the opinion and I reiterate my opinion that there is no supercycle in base metals. Sure, there is a bull market, but there is no supercycle. I'll tell you the reason why.

If you look at what's happening in Chile and it's not just Chile, you can extrapolate it to many other Latin American, Southeast Asian, Middle East, North African countries. These countries are up to here in debt. They might be resource exporters, but they are up to here in debt and the only way they can repay the debt is to sell more of what they sell, which is commodities.

And hey, when they sell, more prices come down. This is something that many of my learned friends are ignoring. But I as a business owner tend to have a little a different kind of process as compared to the others. So of course, can I be wrong? Yes, I reserve the right to be wrong, but this is what I feel is happening.

Take the case of Brazil, which has been exporting gold 30% higher than what it has been disclosing. Why? Because the remaining 30% excess gold is being sold in the parallel or the smuggling market.

Ditto for oil and natural gas. OPEC imposes quotas, countries sell under the table. I ask you where the guys who were telling you that crude oil is going to go to US$100 a barrel in the WTI trade, which means the brent would have obviously gone even more higher. So today the same guys are telling me Vijay, it might be difficult for WTI crude to hold even US$60 a barrel.

Ditto will happen to natural gas. Last year, there was such a big disruption in the supply that a huge amount of natural gas got unsold and huge amount of natural gas was stored in underground storage tanks, which of course cost money to rent and now the natural gas sellers are adding onto the cost of that storage plus profit and giving you a hypothesis of a supply crunch.

You see, hypothesis can be laid out in the financial market. It is the nature of the financial market to keep giving you newer stories. So last time, about 3 to 4 months ago, it was the storey of US$100 a barrel of crude. Now it is US$5 for MMBtu, US$6 for MMBtu of natural gas. Can it happen? Why not? Take a look at what happened to lumber? It went up six times, but what happened? Number surrendered 50% of its gains in three weeks.

This is why I tell you that form an opinion. Look at the bigger picture and adopt a 360 degree worldview. I'm not saying that crude oil or natural gas will go up six times. They're too big compared to lumber. Lumber is an illiquid market, which is why it could manage to up.

Now coming to equities. Why am I saying that equities will rise? It's not just the US dollar. The dollar, of course, will weaken and therefore our overseas debt etcetera will become more manageable but less intervention by the US means lesser conflicts, easier flow of goods and services across borders, more peace in the world.

Let us also not forget before resigning office, Prime Minister Benjamin Netanyahu's signed a diplomatic treaty with the United Arab Emirates. It's unthought of. Sunni Muslim countries signing a diplomatic document of peace with Jewish country, which is Israel.

Obviously, crude oil fell. I forecast this, that crude oil will fall because there is going to be lesser conflict between the Israelis and many Sunni Muslim factions or even the Shia Muslim factions, because they're going to quieten down a little bit, just a little bit.

Now look at was happening in Oman. Oman is basically ready to a join hands or shake hands with the Israelis. Let's not forget Benjamin Netanyahu again, going unannounced to the palace of Sultan, late Sultan, Qaboos Al Said and Sultan was shown in the official press release photograph as offering him a cup of tea. In the sultan's country, at that point in time, it was a crime, it was a crime to have a Jew in your house and you offer him food but these are peace feelers.

In the Equitymaster Conference of 2019, when I went on board with the Equitymaster, I remember basically commenting upon what I call, this is a self-coined term. The Jared Kushner Doctrine. This was President Trump's son in law trying to basically get the Arabs and the Jews to become friends. You are already hearing in the public domain as to how the Israelis and Prince Mohammed bin Salman have had secret meetings.

So the world is going to get a lot more peaceful. The Americans are going to intervene less and less. And when there is peace, there is constructive energy. Markets will rise. There will be more prosperity generally, of course, I'm not saying that every part of the world, including the remotest village in Africa, will rain money. It's not that easy, and it's not happening overnight.

But I think that barring the shock value of the headlines that you're reading elsewhere, which are sensational in nature and of course, Afghanistan, which is the open equation as of now, because the Isis Khorasan, the Isis K they call themselves, Isis of Khorasan is combating the Taliban for supremacy over Afghanistan and who will win is something that only time can tell us.

So barring Afghanistan some pockets in the Middle East like Yemen, Syria, etcetera, largely, I feel over the next decade or so the world is going to be a more peaceful place, and this would be an extremely good time to be in financial assets, in equities.

This is my big picture, my understanding of the world. Like I said, don't just go out there and buy everything you can tomorrow morning after seeing this video because this is a 360 degree worldview. This is something that you need to sit on a dining table on Sunday with a cup of coffee. Make your financial plans, the blueprint for the next one decade or so, and deploy your money carefully in good blue chip stocks. The best years are ahead of me.

On this optimistic note, I bid goodbye to you, not before reminding you to click like on this video, if you agree with what you saw. Subscribe to my YouTube channel if you haven't already done so. Click on the bell icon to receive instant alerts about fresh videos being put up out here. Good, bad or ugly, keep your comments coming. I welcome all your feedback and help me reach out to fellow like-minded investors and traders by recommending my videos to your family and friends.

Thank you for your patience and watching my video and a world view that I have with the market. I wish you have a very, very, profitable day ahead. Vijay Bhambwani signing off for now till we meet again in my next. Do take very good care of your trades.