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US economy, stock market .vs. BRIC economy, stock market June 3, 2008

Posted by Bipin Agarwal in Global Economy.

How linked is US economy to US stock market .vs. BRIC (Brazil, Russia, India, China) economy and stock market and everything in between. There are so many factors beyond anybody control that it is hard to predict. However, there are some macro issues that are going to effect everything. 1) US Sub-prime and real estate market – financial institutions may be able to get their act together in next year or so, effect at the consumer level will be felt for three to five years across the world, 2) US current account and trade deficit, 3) Impact of subsidy in BRIC countries and its effect on inflation, interest rate, current account deficit, and currency reserve will take a lot of courage to solve the problem. Europe and middle east have their own problem with oil, absence of critical mass of consumers, educated work force, and currency.

One theory is that high oil price and food price are good for America. America controls lot of middle east money, abundance of food, media control, and defense superiority, that will make US a winner. Other theory is that China, India, USSR, some middle east combination will re-shape the global economy. I am sure there are lot of other theory out there. Do not hesitate to share one.

Will US stock market do well because of US economy or global economy? What about the stock market in BRIC country? It depends on which theory you believe and then make the prediction based on the analysis of that reality. Until then, stay tuned.


Bipin Agarwal


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