The 5 Pillars of Life

There was quite a number of positive news for the month of March. The indices which took a dip in January and February, finally took a turn in March to get back into positive territories for 2010.

Let us take a look at the March and Year to date performances of selected indices.

The 1st Minute – Let us appreciates the Indices for the month of March

a) March was a very good month for most indices regardless of developed or developing economies. Nikkei index surprising posted a near 10% gain for the month and Emerging Market lagged slightly behind at 9.4%.

b) Singapore and Hong Kong year to date performance is lacklustre at 0.3% and -1.2% respectively so far. It is probably due to their strong performances at end 2009.

c) Oil and Gold prices continue to creep upwards in March but at a relatively controlled pace. This could be due to the stability of the US currency and the gradual growth of the global economies thus far.

d) The Vix index dipped nearly 10% in March. This may signal lesser fear and more assurances among investors that the economy is well on the mend.

e) Baltic index is still hovering around 3,000 and had held around this figure for many months. There do not seems to be any surging shipping demand yet.
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2nd Minute – Let us look at the US economy this month

a) Many positive data seems to point towards sustainable growth in the US economy
i) US ISM Manufacturing survey for March was 59.6. This index have been above the 50 mark for 8 consecutive month which indicate continual production growth over the same period.
ii) The Real Retail and Food Services Sales shows a marked increase of 1.6% and had been growing since Nov 09.
iii) The Payroll report shows that 162,000 jobs were created for the month of March of which 123,000 came from the Private Sector and unemployment remains stable at 9.7%

b) I still believe that the key to another bull run will be the unemployment figures in the US. Continual good news can give more assurance towards the economic recovery and things should look rosier if the unemployment rate can drop to 9% before end of the year.

c) In my opinion, the indices are fairly good reflection of the current economic situation. I do not expect any major correction or surge in the next quarter..
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3rd Minute – Risk Ahead and Prospects Ahead

Risks
a) China encountered their first monthly trade deficit since 2004. Should this persist in the following months, the Chinese government may impose more policies tightening measures.

b) Credit issues that haunt the Euro economies shows that growth is not without barriers

c) Withdrawal or fading of Stimulus plans from developed nations is likely in the near term as their budget seems stretched

d) If US unemployment remains stubbornly high over the next 2 quarters.

Prospects
a) Self sustaining mechanism start kickings in and employment improve naturally

b) The next bullish phase where economy turns from Recovery mode to Expansionary mode

c) Continual Corporate Profitability coupled with controlled interest rate hike

I will keep my view that the road ahead seems hazy but light can be seen at the end of it. There will be plenty of noises along the way but we shall be duly rewarded if we keep our long term view.