Equity

What will happen from here on?

Apparently everything is on track again, and global markets have recovered from their lows, Crude is back with a bang and commodity prices are going up again. But the question is will all this remain hunky dowry for the next one year or the things may become difficult from here on.

Most of the analysts would believe the recovery is not on the tine ice and is standing on a firm ground, but i still have some doubts on the sustainably of this recovery.

I ask following questions and look for the answers.

Is the US fiscal deficit sustainable?
Who will buy all the government securities?
What will happen to the G sec yield?
Will the inflation come back?

Here is my understanding

Is the US fiscal deficit sustainable?
No. A high fiscal deficit would mean high taxes.
Who will buy all the government securities?
Difficult to find buyers
What will happen to the G sec yield?
Will go up, if a 4% is not high enough.
Will the inflation come back?
Yes.

So what we are looking at is high taxes, high G sec yield, which will make corporate debt yields unsustainable, and high inflation.

Now does this should makes the recovery unsustainable?
My answer is yes.