Weekly Recap: The Darwin Economy

world.2014-09-12.2014-09-19

Equities

Major
DAX(DEU) +1.53%
CAC(FRA) +0.44%
UKX(GBR) +0.45%
NKY(JPN) +2.34%
SPX(USA) +1.26%
MINTs
JCI(IDN) +1.63%
INMEX(MEX) +0.20%
NGSEINDX(NGA) +0.93%
XU030(TUR) -1.10%
BRICS
IBOV(BRA) +0.90%
SHCOMP(CHN) -0.11%
NIFTY(IND) +0.20%
INDEXCF(RUS) -1.85%
TOP40(ZAF) +0.65%

Commodities

Energy
Brent Crude Oil +1.06%
Ethanol -9.04%
Heating Oil -1.02%
Natural Gas +0.03%
RBOB Gasoline +3.15%
WTI Crude Oil +0.06%
Metals
Copper -0.32%
Gold 100oz -0.71%
Palladium -2.65%
Platinum -2.27%
Silver 5000oz -4.30%

Currencies

USDEUR:+0.92% USDJPY:+1.59%

MINTs
USDIDR(IDN) +1.25%
USDMXN(MEX) -0.29%
USDNGN(NGA) +0.20%
USDTRY(TUR) +1.01%
BRICS
USDBRL(BRA) +1.09%
USDCNY(CHN) +0.09%
USDINR(IND) +0.28%
USDRUB(RUS) +1.79%
USDZAR(ZAF) +0.69%
Agricultural
Cattle -0.59%
Cocoa +2.78%
Coffee (Arabica) +0.17%
Coffee (Robusta) -2.17%
Corn -0.38%
Cotton -7.18%
Feeder Cattle +0.40%
Lean Hogs +0.09%
Lumber -5.73%
Orange Juice -2.53%
Soybean Meal -25.03%
Soybeans -12.21%
Sugar #11 -2.24%
Wheat -4.43%
White Sugar +4.07%

Credit Indices

Index Change
Markit CDX EM -0.28%
Markit CDX NA HY -0.08%
Markit CDX NA IG -0.35%
Markit CDX NA IG HVOL +0.88%
Markit iTraxx Asia ex-Japan IG +2.32%
Markit iTraxx Australia +1.30%
Markit iTraxx Europe -0.32%
Markit iTraxx Europe Crossover -0.36%
Markit iTraxx Japan -0.21%
Markit iTraxx SovX Western Europe +0.68%
Markit LCDX (Loan CDS) -0.06%
Markit MCDX (Municipal CDS) +3.00%
The Dollar rallied across the board and precious metals took it on the chin. Bad news about the economy is good news for Japanese markets – BOJ will continue to hoover up any and all assets as it fights deflation and tries to kick start a moribund economy. The Scotland “No” vote prevented a disintegration of the British Pound and their banking system. Alibaba popped at its debut in NYSE to a market value of $230 billion on a fully diluted basis.

Nifty Heatmap

CNX NIFTY.2014-09-12.2014-09-19

Index Returns

index performance.2014-09-12.2014-09-19

Sector Performance

sector performance.2014-09-12.2014-09-19

Advance Decline

advance.decline.line2.2014-09-12.2014-09-19

Market Cap Decile Performance

Decile Mkt. Cap. Adv/Decl
1 (micro) -1.51% 74/71
2 -2.23% 72/72
3 -1.08% 67/77
4 -0.32% 69/75
5 -1.86% 67/77
6 -1.24% 70/75
7 +0.60% 70/74
8 -0.34% 76/68
9 -0.32% 74/70
10 (mega) -0.16% 67/78
One wonders how the NIFTY ended in the green this week…

Top Winners and Losers

DRREDDY +8.93%
ZEEL +10.47%
INFRATEL +10.91%
JINDALSTEL -10.82%
YESBANK -7.99%
PFC -7.16%
Infratel: the volatility in the stock is enough to give you ulcers. Yes Bank collapsed on hitting its FDI cap. It will be a good buy soon…

ETFs

NIFTYBEES +0.30%
INFRABEES +0.27%
JUNIORBEES -0.80%
GOLDBEES -0.82%
BANKBEES -0.88%
CPSEETF -3.84%
PSUBNKBEES -3.92%
PSU banks will be hitting the market soon with fund raising plans… we should all do our duty as tax-paying Indian citizens and avoid them.

Yield Curve

yield Curve.2014-09-12.2014-09-19

Bond Indices

Sub Index Change in YTM Total Return(%)
GSEC TB +0.36 +0.06%
GSEC SUB 1-3 +0.31 -0.28%
GSEC SUB 3-8 +0.08 -0.01%
GSEC SUB 8 -0.06 +0.78%
The long end of the curve is getting bid up on rate-cut expectations next year…

Nifty OI

nifty.puts.calls.SEP.2014-09-12.2014-09-19

Bank Nifty OI

bank-nifty.puts.calls.SEP.2014-09-12.2014-09-19

Theme Performance

IT stocks got bid up this week, probably because of the Dollar rally. The rest of them were mixed bags.

Thought for the weekend

The real challenge to Adam Smith’s invisible hand is rooted in the very logic of the competitive process itself.

Charles Darwin was one of the first to perceive the underlying problem clearly. One of his central insights was that natural selection favors traits and behaviors primarily according to their effect on individual organisms, not larger groups. Sometimes individual and group interests coincide and in such cases we often get invisible hand-like results.

In other cases, however, mutations that help the individual prove quite harmful to the larger group. This is in fact the expected result for mutations that confer advantage in head-to-head competition among members of the same species. This conflict pervades human interactions when individual rewards depend on relative performance.

Source: The Darwin Economy – Why Smith’s Invisible Hand Breaks Down

Opening Bell 19.09.2014

Your world at 9am

world.2014-09-19

Equities

Major
DAX(DEU) +1.41%
CAC(FRA) +0.75%
UKX(GBR) +0.57%
NKY(JPN) +1.45%
SPX(USA) +0.49%
MINTs
JCI(IDN) +0.46%
INMEX(MEX) +0.29%
NGSEINDX(NGA) -0.11%
XU030(TUR) -2.10%
BRICS
IBOV(BRA) -1.24%
SHCOMP(CHN) -0.32%
NIFTY(IND) +1.75%
INDEXCF(RUS) -0.05%
TOP40(ZAF) +0.90%

Commodities

Energy
Brent Crude Oil -0.02%
Ethanol +1.14%
Heating Oil +0.05%
Natural Gas -0.10%
RBOB Gasoline +0.37%
WTI Crude Oil -0.08%
Metals
Copper +0.00%
Gold 100oz +0.00%
Palladium -0.13%
Platinum -0.14%
Silver 5000oz +0.00%

Currencies

USDEUR:+0.01% USDJPY:+0.48%

MINTs
USDIDR(IDN) +0.14%
USDMXN(MEX) +0.14%
USDNGN(NGA) +0.65%
USDTRY(TUR) +0.22%
BRICS
USDBRL(BRA) +0.30%
USDCNY(CHN) -0.05%
USDINR(IND) -0.11%
USDRUB(RUS) +0.26%
USDZAR(ZAF) +0.08%
Agricultural
Cattle -0.06%
Cocoa +0.98%
Coffee (Arabica) -2.14%
Coffee (Robusta) -1.30%
Corn -0.15%
Cotton +0.00%
Feeder Cattle +0.13%
Lean Hogs +1.82%
Lumber +0.33%
Orange Juice +1.34%
Soybean Meal -0.40%
Soybeans -0.36%
Sugar #11 -1.08%
Wheat -0.51%
White Sugar -0.91%

Credit Indices

Index Change
Markit CDX EM -0.02%
Markit CDX NA HY +0.48%
Markit CDX NA IG -2.78%
Markit CDX NA IG HVOL -2.94%
Markit iTraxx Asia ex-Japan IG -0.71%
Markit iTraxx Australia +0.09%
Markit iTraxx Europe -2.01%
Markit iTraxx Europe Crossover -7.24%
Markit iTraxx Japan +0.16%
Markit iTraxx SovX Western Europe +0.05%
Markit LCDX (Loan CDS) +0.00%
Markit MCDX (Municipal CDS) +1.33%
Looks like the “NO” vote is winning in Scotland – so all quiet on the macro front. NKY up in the morning and SPX ended in the green. Looks like a nice way to end the week overall…

Must reads

.
Modi to launch ‘Make in India’ campaign next week. (FP)

Chinese jewellery fabrication demand had dropped 22% to 351 tonnes in the first half of 2014. India saw retail demand fall 18% to 296 tonnes. Overall, GFMS expects physical gold buying, which includes retail, central bank and investment demand, to fall 15.9% to 4,174 tonnes in 2014. (FT) GOLDBEES 2,480.00 -18.65 (-0.75%)

Substituting renewable energy for coal to produce electricity is feasible and increasingly economical. And America is souring on coal. (SierraClub)

Innovation always finds itself slammed by legal and bureaucratic action. (LiveMint) But the biggest lever that incumbents have against disruptors is regulation. (The Disruptor’s Dilemma)

Good luck and have a nice weekend!

Opening Bell 18.09.2014

Your world at 9am

world.2014-09-18

Equities

Major
DAX(DEU) +0.30%
CAC(FRA) +0.50%
UKX(GBR) -0.17%
NKY(JPN) +1.01%
SPX(USA) +0.13%
MINTs
JCI(IDN) +0.10%
INMEX(MEX) +0.39%
NGSEINDX(NGA) +0.20%
XU030(TUR) +0.37%
BRICS
IBOV(BRA) -0.01%
SHCOMP(CHN) +0.37%
NIFTY(IND) +0.54%
INDEXCF(RUS) -1.89%
TOP40(ZAF) -0.15%

Commodities

Energy
Brent Crude Oil -0.61%
Ethanol -0.53%
Heating Oil -0.45%
Natural Gas -0.32%
RBOB Gasoline -0.26%
WTI Crude Oil -0.65%
Metals
Copper +0.00%
Gold 100oz -1.47%
Palladium -1.42%
Platinum -0.87%
Silver 5000oz +0.00%

Currencies

USDEUR:-0.04% USDJPY:+0.18%

MINTs
USDIDR(IDN) +0.46%
USDMXN(MEX) +0.12%
USDNGN(NGA) +1.03%
USDTRY(TUR) +0.09%
BRICS
USDBRL(BRA) +1.12%
USDCNY(CHN) +0.05%
USDINR(IND) -0.24%
USDRUB(RUS) +0.26%
USDZAR(ZAF) +0.15%
Agricultural
Cattle -0.70%
Cocoa +1.74%
Coffee (Arabica) -0.42%
Coffee (Robusta) +1.58%
Corn -0.29%
Cotton +0.00%
Feeder Cattle +0.00%
Lean Hogs -1.14%
Lumber -0.21%
Orange Juice -0.28%
Soybean Meal +0.21%
Soybeans +0.33%
Sugar #11 +3.17%
Wheat -0.50%
White Sugar +0.51%

Credit Indices

Index Change
Markit CDX EM +0.22%
Markit CDX NA HY -0.22%
Markit CDX NA IG +0.14%
Markit CDX NA IG HVOL +0.71%
Markit iTraxx Asia ex-Japan IG +3.37%
Markit iTraxx Australia +1.83%
Markit iTraxx Europe +2.18%
Markit iTraxx Europe Crossover +11.59%
Markit iTraxx Japan +0.50%
Markit iTraxx SovX Western Europe +0.45%
Markit LCDX (Loan CDS) +0.00%
Markit MCDX (Municipal CDS) +0.62%
NKY up in the morning, SPX up overnight. Gold at 4-year lows. NIFTY opens in the red…

Must reads

Fed: the first rate hike in in eight years is likely to come sometime next year. The $15 billion a month QE will end at its next meeting. But don’t worry, the easy money supply is not going away. ECB, BOJ and PBOC – representing 40% of world GDP – are in easing mode. And India is set to join them. (WSJ, Cheat Sheet)

Ikea is looking to buy land parcels for constructing stores spread over 5-6 acre, to spend Rs 500 crore on each store. What real-estate glut? (DNA)

Loose lips sink ships? Just so we are clear: EPFO not considering any proposal to invest in stock markets. (LiveMint)

GM food haters can go kill themselves. Researchers have completed the second of three major steps needed to turbocharge photosynthesis in crops such as wheat and rice, something that could boost yields by around 36 to 60 percent for many plants. Because it’s more efficient, the new photosynthesis method could also cut the amount of fertilizer and water needed to grow food. (MIT)

You can now attach your iPad directly to your face to experience virtual reality. (Verge)

Good luck!

Institutional Investing Trends

A quick update to our II Trend report from last month.

Foreign Institutional Investors keep the faith

FII invested $1742.07 million in debt vs $1221.89 million in equities so far in Septmeber.

fii-investments.2012-01-01.2014-09-15

fii-investments-equities.2012-1-1.2014-09-15

Domestic Institutionals were obsessed with debt

In September, DIIs invested Rs 20,379.6 cr in debt vs. -310.5 cr in equity.

dii-investments.2012-01-01.2014-09-15

dii-investments-equity.2012-1-1.2014-09-15

dii-investments-debt.2012-1-1.2014-09-15

A trade for everyone

Not sure what I like better – debt or equity. Debt investors will benefit from the falling interest rate environment in AAA paper and shrinking defaults in sub-primes. Equity investors will benefit from improving balance-sheets and an improving demand-side equation. Stay tuned…

Opening Bell 2014.09.17

Your world at 9am

world.2014-09-17

Equities

Major
DAX(DEU) -0.28%
CAC(FRA) -0.44%
UKX(GBR) -0.18%
NKY(JPN) +0.12%
SPX(USA) +0.75%
MINTs
JCI(IDN) +0.98%
INMEX(MEX) -0.01%
NGSEINDX(NGA) -0.30%
XU030(TUR) +1.08%
BRICS
IBOV(BRA) +2.01%
SHCOMP(CHN) -0.06%
NIFTY(IND) -1.36%
INDEXCF(RUS) +1.59%
TOP40(ZAF) -0.32%

Commodities

Energy
Brent Crude Oil -0.10%
Ethanol +0.00%
Heating Oil -0.07%
Natural Gas -0.30%
RBOB Gasoline +0.28%
WTI Crude Oil -0.11%
Metals
Copper -0.66%
Gold 100oz +0.00%
Palladium -0.25%
Platinum +0.05%
Silver 5000oz +0.00%

Currencies

USDEUR:+0.04% USDJPY:+0.06%

MINTs
USDIDR(IDN) -0.42%
USDMXN(MEX) +0.09%
USDNGN(NGA) -0.16%
USDTRY(TUR) +0.09%
BRICS
USDBRL(BRA) -0.48%
USDCNY(CHN) -0.04%
USDINR(IND) -0.14%
USDRUB(RUS) -0.15%
USDZAR(ZAF) +0.08%
Agricultural
Cattle +0.85%
Cocoa -1.76%
Coffee (Arabica) +1.58%
Coffee (Robusta) -0.35%
Corn -0.07%
Cotton +0.00%
Feeder Cattle +0.26%
Lean Hogs +0.91%
Lumber -1.13%
Orange Juice -1.52%
Soybean Meal +0.27%
Soybeans +0.56%
Sugar #11 -0.37%
Wheat -0.10%
White Sugar +3.13%

Credit Indices

Index Change
Markit CDX EM -0.05%
Markit CDX NA HY -0.33%
Markit CDX NA IG +1.47%
Markit CDX NA IG HVOL +1.91%
Markit iTraxx Asia ex-Japan IG +2.89%
Markit iTraxx Australia +1.24%
Markit iTraxx Europe +1.93%
Markit iTraxx Europe Crossover +6.41%
Markit iTraxx Japan +0.00%
Markit iTraxx SovX Western Europe +0.40%
Markit LCDX (Loan CDS) +0.00%
Markit MCDX (Municipal CDS) +0.79%
SPX up overnight and NKY in the green this morning. Fed and Scotland occupy investor mindshare…

Must reads

Indian business has been on a decade-long binge, more than doubling its debt to 50% of gross domestic product last year to roughly $900bn. (FT) LiveMint’s three key takeaways from India’s debt crisis (LiveMint):

  1. The governance and management of banks in India need urgent overhaul.
  2. Rules for promoters have been far too soft for far too long, and that needs to change.
  3. We must resist the temptation for any kind of bailouts, whether it is through special packages for stressed sectors or through state owned asset reconstruction companies.

Banks are cutting deposit rates. “…abundant liquidity in the system even as credit pick-up remained slower than expected.” (TI)

Kingfisher Airlines: Wilful defaulter norms don’t apply to us. (FE)

Good luck!