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[pkholla]

[vinay28]

An Interesting article. BTW, India's tallest skyscraper "World 1", presently approved for 68 stories and finally 111 subject to approval, will be completed in Dec '16. Tallies with my prediction of a crash from Jan '17.

Vinay

Saudi Arabia Next to Fall?
By Alex Koyfman | Thursday, July 23rd, 2015

Economists love to concoct and play with all sorts of outlandish indicators of impending economic downturn.

They talk about bread prices and milk prices, prices of microchips, even the rates currently being charged by escorts, all in an attempt to pinpoint the time and place where the next economic meltdown will take place.
Economists —or as I like to call them, "lawyers with numbers" —can make any theoretical argument based on the set of data they choose to work with.

And because the volume of data potentially affecting macroeconomics is so enormous, there is an infinite number of ways a skilled mathematician can rationalize the predictive model of their choosing —no matter how strange or random it may seem to common sense.

Even an amateur economist could probably rationally correlate a sudden rise in latex prices with an upcoming financial meltdown in the Los Angeles entertainment industry —but for it to be significant, or matter at all, this pattern has to repeat itself on a consistent basis.

Well, there is one theory out there that has held up over the course of time.

For more than 140 years now, a very specific trend has established itself within industrialized nations —and so far, it's managed to repeat itself multiple times through some of the 20th and 21st centuries' darkest economic hours.

It's called the Skyscraper Index, and the rule it states is simple enough:
The location of the world's current tallest building under construction is where financial ruin is coming next or has already arrived.

Here is the current list of hits, spanning more than 14 decades of modern history:
• The Equitable Life Building, finished in New York in 1873, coincided with a five-year recession.
• The Empire State Building first broke ground in 1930 but was planned well before Wall Street crashed in 1929 and was built as the world sank into the Great Depression.
• The World Trade Center and the former Sears Tower (now the Willis Tower) were both built around the time of the oil crisis in the early '70s.
• Kuala Lumpur’s Petronas Towers, completed in 1998, coincided with the Asian financial crisis of the late '90s.
• In 2009, the Burj Khalifa, the tallest building ever, stood finished— and just about vacant —over a financial collapse that nearly ruined Dubai.
• As you read this, the Shanghai Tower is scheduled for completion this summer, and like clockwork, the Chinese economy is now threatening yet another broad-spectrum global crisis.

So... what makes this index work when others fail?

Which key economic factors does it consider and juxtapose properly to be such a strong indicator of unsound economic principals?

Simplicity, Not Superstition

When it comes to any reliable mechanism, simplicity is usually the key —and the same holds true here.

People build higher and higher when square footage of property becomes more expensive.

Wherever property developers and cutting-edge architects choose to max out their buildings, that's the general area where an economic peak is also on the horizon.

This concept may seem contradictory to the rest of us because we usually associate skyscrapers with success and prosperity.
And in truth, they do symbolize that... but when propelled by the hubris of CEOs and investors who think they're going to win big on already record-setting real estate prices, while at the same time making a statement about their success to the world, they're symbols of waning success and prosperity, not a predictor of good times.

So where's the next economic peak to strike?

The Gateway to Mecca... Or the Gateway to Calamity?

Well, not too shockingly, hubris and rampant overspending abound in the Middle East —and right now, there's a building in the planning stages that will make even the 2,700-foot Burj Khalifa, the world's current tallest building, look like a runt.

It's called the "Kingdom Tower," and at over a kilometer in height, it will beat the herald of Dubai's economic recession by 550 feet.

Construction of the kilometer-tall (3,200-foot) building began in 2013, with previous plans calling for an even taller behemoth standing more than 1,600 meters, or right around a mile.

To put things into perspective, that's almost twice the height of the newly finished Freedom Tower in New York, including the spire —which is currently the tallest building in the Western Hemisphere.

But never mind the specifics, as I'm sure they'll all be extreme.

What matters here is that the building is going up in Jeddah, Saudi Arabia.

Considered the gateway to both Mecca and Medina, the holiest and second-holiest cities in Islam, respectively, Jeddah is also a major urban and economic center of the Saudi Kingdom.

A recession there would mean a definite shift in the fundamental structure of today's oil supply chain.

It would mean one of two things:

Either that prices are going to plummet (which is unlikely not just given today's already depressed oil market but also because price control has always been a favorite weapon of OPEC, something it used to keep upstart competitors out of the picture)...

Or that Saudi oil is heading where we all know it's been heading: into oblivion.

In 2014, for the first time in decades, American oil production exceeded Saudi production, all thanks to alternative extraction methods such as fracking.

Saudi oil production, on the other hand, has stagnated, and its single-biggest asset —the legendary Ghawar oil field, the biggest in the world —is a mere shadow of its former self:

Coincidence? Or is the skyscraper index about to take its next victim?

We'll have to wait a few years to see. The Kingdom Tower isn't due to be completed until 2019 —at which point it may already be clear if it will open to a full house or to a recession big and profound enough to change the landscape of Middle Eastern economics and, by extension, global politics.

Whichever scenario comes to pass, the old guard of energy investment is definitely showing chinks in its armor.

[amitagg]

Vinay u had posted a chart few months back of how PE would affect Nifty rise or fall in percentage values
With current 23 PE and not so good results it may be worthwhile to look of any scope of upside there

[vinay28]

[rk_a2003]

[vinay28]

rk, tks for hunting out this thread. I couldn't.

paucity of time prevents me from giving detailed explanation for my statement below but previous posts in this thread can give some idea. If I get time, I will give more info.

I am afraid that next two years may be worst of this century.

[vinay28]

one advance way of telling where market is heading is to track how s&p bse dollex is behaving. it measures dollar equivalent of sensex. This helped me going heavily long when nifty went to 6825 and again near 10000. In recent days, due to rise in INR, the deviation between it and nifty is reduced meaning nifty has risen more in dollar terms. I track it regularly and will try to post if I sense anything, time permitting.

I am attaching a chart of Baltic Dry Index, as update to what I posted in 2014. It made a new 3 year high in 2018 affirming my decision to go long. The chart suggests a lower low is now pending, and if it happens, it may suggest worldwide recession in coming years.