Category: Your Money

Sunder’s List

United (States) Parcel Service.

(Photo credit: matt.hintsa)

Europe closed mostly lower: Stoxx 50 -0.7%, Germany -0.8%, France +0.4%, Italy -2.5%, Spain -2.6%, U.K. -0.9%. US: S&P -0.3%, Nasdaq +0.33%

The Eurozone infection has finally spread to the core: German PMI fell to a 33-month low, France’s job losses quickened to the sharpest since July 2010. (FT)

Hendry on Europe: ‘The reality is you just can’t make up how bad it is’ (FT Video)

Spain in denial: “Yes, there is oversupply at the moment because of the financial crisis and everyone’s gone back home to live with their parents, but it’s not because there is lack of demand. When the economy gets back on track I am confident the supply will be absorbed.” (Bloomberg)

Wealthy Americans quit… America? About 1,780 expatriates gave up their nationality at U.S. embassies last year, up from 235 in 2008. (Bloomberg)

Peter Schiff: US Treasurys Are ‘Junk,’ Dollar Headed for Collapse (CNBC)

Stay tuned for the next part in the Technical Analysis Tutorial series…

GAAR-hit FIIs give India a miss

India Gate

India Gate (Photo credit: aroris)

Just when it seemed like foreign institutional investors (FIIs) have reaffirmed their faith in Indian equities, the enthusiasm has fizzled. After pouring hefty funds into the Indian equity market in the first two months of the year, overseas investors turned bearish in April and pulled out Rs 777 crore.

Jan and Feb saw a smart rally with the Sensex jumping over 2000 points or over 12% as foreign funds pumped $8.72 billion into Indian stocks on hopes of monetary easing by the Reserve Bank of India (RBI) and the improving liquidity position. Nifty, which hit a high of 5600 points in mid-Feb, has consistently drifted downwards and has been trading in a narrow range. Higher foreign inflows have also been aided by cheap loans doled out by the European Central Bank (ECB) through long term refinancing operations (LTRO).

imagePost the Union Budget in mid-March, uncertainty surrounding General Anti Avoidance Rules (GAAR) and continued paralysis in decision making at the centre has resulted in foreign investors adopting a wait and watch stance. Especially, proposals regarding GAAR have spooked foreign investors as they fear tax authorities could use them to deny the benefits of Double Taxation Avoidance Agreement (DTAA) to a private investment fund or vehicle organized in Mauritius. A huge chunk of foreign funds in equities comes from companies that are registered in the tiny island nation and are exempted from tax in India under DTAA with Mauritius.

imageLast year, the index fell by nearly 25%, the second worst annual loss, as foreign investors pulled out over Rs 27,000 crore after a series of rate hikes by the RBI to fight inflation hurt factory output while Europe’s debt crisis stalled global growth and tempered demand for emerging-market assets.

But India’s problems are far from over. While fiscal deficit has been a problem for sometime now, the ballooning current account deficit is a major cause of worry.

The current account deficit was $19.6 billion in the December quarter, higher than $9.7 billion a year earlier. The widening current account deficit coupled with sluggish capital inflows will further worsen the macro-economic picture and cloud outlook for Indian equities.

imageTwin deficits, policy logjam, regulatory flip-flops on tax issues like GAAR and retrospective amendments and the likelihood of a rebound in inflation threatens to derail India’s growth story.

Since FIIs are the driving force of Indian markets, any thoughts of regaining 21k and 6k for both Sensex and the Nifty rests on the government getting its act together on both policy and execution front, lower global commodity prices, mainly oil, and inflation staying in ‘comfort zone’.

Sunder’s List

Logo of General Motors Corporation. Source: 20...

(Photo credit: Wikipedia)

London +0.2%. Paris -1.6%. Frankfurt -0.6%. S&P +0.62%

General Motors India’s April sales declined 20.34% (ET)

“China is big, but its hard” On why GE is shifting focus from Brazil, Russia, India and China to Canada, Peru, Mongolia and Australia. (WSJ)

“banks are global in life, but national in death.” The financial markets and commercial banking are both undergoing de-globalization. That’s bad. (Slate)

God Speed!

Sunder’s List: May Day! May Day!

Markets are closed today on account of May Day. Here’s something to keep you busy:

European and US markets ended down: Stoxx 50 –1.6%, Germany -0.6%, France -1.8%, Italy -1.6%, Spain -2.4%, U.K. -0.6%, S&P -0.42%, Nasdaq -0.66%.

Americans are getting bullish on Gold? Time to introduce Akshaya Tritiya to the US: Investing in gold has gained in popularity in recent years as low interest rates have made traditional savings instruments less attractive, and instability in the stock and real estate markets has undermined the mass appeal of those options. (Gallup)

“Coal is a mess” so solar gets to shine? Not sure I agree with the logic: the problem is pilferage and subsidies, not the cost of producing power. (Gigaom)

Hugh Hendry: “There is a near consensus that China will supplant America this decade. We do not believe this. We are more bullish on US growth than most. The momentous nature of recent advances in shale oil and gas extraction and America’s acceptance of the unpleasantness of debt and labour price restructuring looks to us as if it is creating yet another historic turning point. By embracing his inadequacies and leaping on his luck, the strong man may have finally broken the binds that had previously held him back. We are also more pessimistic on Chinese growth than ever.” (ZH)

Enjoy the day off and see you tomorrow!

Sunder’s List

Three Copper, Gemstone, Czech Glass, and Cryst...

(Photo credit: bloody marty mix)

This week is going to be extremely volatile for US markets. Indian markets might just follow their lead. Stay nimble! (BI)

When staff car parks are being used to store copper, you know you are drowning in it:

China is being buried alive in copper. (FT)

Robert Wenzel: The noose is tightening on your organization [US Fed], vast amounts of money printing are now required to keep your manipulated economy afloat. It will ultimately result in huge price inflation, or,  if you stop printing, another massive economic crash will occur. There is no other way out. (EPJ)

Spanish unemployment is sitting close to 25%. Spanish GDP is expected to grow by 0.2% in 2013 and by 1.4% in 2014 after contracting by 1.7% this year. (WSJ)

Is Japan the next big short? (AR-Alpha)

Thought for the week: “No one can be considered happy until their fate is known.” Famous last words, Spanish Edition (FT)