Tag: reading

Sunder’s List: Cuz, Merica!

Roundup: S&P +0.25%, Dow +0.15%, Nasdaq +0.67%, Gold $1239.40, London +0.20%, Germany +0.66%, France +0.36%. At pixel: Nikkei +1.09%, Hang Seng +0.71%

After Goldman, Nomura chants NaMo: Nomura expects a BJP-led coalition to form the next government at the Centre after the 2014 elections. (ET)

When it comes to reckless money creation, it turns out that China is the king. Over the past five years, Chinese bank assets have grown from about 9 trillion dollars to more than 24 trillion dollars. This has been fueled by the greatest private debt binge that the world has ever seen. (SA)

Pope Francis calls unfettered capitalism ‘tyranny’ and urges global leaders to guarantee work, education and healthcare. “How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?” Good question. (Guardian)

US Fed: In the long run, we are so fcuked! “Slower growth in productivity might have become the norm.” “The expected future return of equities is about 4% a year.” etc… (Bloomberg)

Birth Tourism: Lured by U.S. citizenship for their children, thousands of Chinese women give birth annually in the States, supporting a thriving birth-tourism industry. For $30,000-$40,000 you get a plane ticket, accommodation in Los Angeles or Chicago in a two- or three-bedroom apartment or house, plus all the citizenship paperwork for the newborn. Women spend two months in the U.S. before delivery and one month post-partum. Nannies, drivers and a chef will be shared among three women. Naturally, Chinese-speaking doctors will be on call. Cuz, ya know, Merica. (Time)

8 subconscious mistakes our brains make every day and how to avoid them. (FastCompany)

Good luck and Happy Thanksgiving!

 

Sunder’s List: Are Smart People Stupid?

Roundup: S&P +0.01%, Dow flat, Nasdaq +0.58%, Gold $1242.70, London -0.87%, Germany -0.11%, France -0.57%. At pixel: Nikkei -0.25%, Hang Seng +0.03%

Flipkart.com is now valued at roughly Rs.9,900 crore. In comparison, Free Float Market Cap of Mindtree: Rs.4,190 crore. (LiveMint)

The coming margin crunch in Infy: Narayana Murthy has conceded that the company may need to sometimes lower prices to win more business. The move towards flexible pricing is a significant departure from the company’s traditional strategy where it would command a premium on pricing. (LiveMint) [stockquote]INFY[/stockquote]

Residential property prices in some south and central Mumbai locations like Parel, Lower Parel and Mahalaxmi have declined nearly 10%. Developers have been open to negotiation especially in the premium segment, reducing prices up to 25% in favor of a sizeable up-front payment. Vacancy rates in the financial centre of Mumbai and capital New Delhi topped 20% in the third quarter. (ET, LiveMint)

How long before cord-cutting takes root in India? Over the last three years an estimated 5M cable and broadband subscribers in the US have been lost as the Pay-TV sector continues to feel the impact of cord-cutting and the coming of age of cord-nevers. (SA)

The US is on track to become the third largest solar market, behind China and Japan. If all the projects in the pipeline are built, their peak electricity output would be equivalent to that of 43 big nuclear power plants, and enough to keep the lights on in six million American homes. (QZ)

Introducing the “bias blind spot”: our ability to spot systematic mistakes in the decisions of others — we excel at noticing the flaws of friends — and inability to spot those same mistakes in ourselves. Smarter people showed larger bias blind spots. The more we attempt to know ourselves, the less we actually understand. (NewYorker, #tlbbinvesting)

Good Luck!

Sunder’s List: 29 Things…

Roundup: S&P -0.13%, Dow +0.05%, Nasdaq +0.07%, Gold $1251.70, London +0.30%, Germany +0.88%, France +0.55%. At pixel: Nikkei -0.72%, Hang Seng +0.22%

My #1 reason to elect Modi: if BJP is voted to power at the Centre, it will frame legislation for bringing back black money stashed in foreign banks. (DNA)

Mutual fund woes (Poor performance): In a year when Indian shares have hit record highs, fund managers are putting in their worst performance since the global financial crisis in 2008. (ET)

Mutual fund woes (Investor apathy): Equity assets peaked at around Rs2.5 trillion to Rs2.6 trillion in January 2008. The spiral of outflows that started then has continued till date at the rate of Rs.2,000-3,000 crore per month on average. Today, despite the markets recently hitting all-time highs, we are still seeing outflows. Total equity assets today stand at just around Rs.1.5 trillion, 17% of the total assets under management (AUM). (LiveMint)

Something to keep an eye on: Yields on Chinese government debt have soared to their highest levels in nearly nine years amid Beijing’s relentless drive to tighten the monetary spigots. (WSJ)

Goldman Sachs’s Top Ten Macro Themes for 2014 is out. Key point: The bank expects 15% plus declines in prices in gold, copper, iron ore and soybeans. (WSJ)

Analysts’ earnings forecasts are, on average, more than 50% higher than where they should be at the beginning of each year. Then, as reality takes hold, they mean-revert down to where they belong.

analyst revisions

First, they are almost always wrong. Second, forecasts for growth rates are also typically too high. Third, revisions to two-year-ahead EPS largely reflect the error to current year forecasts. (BI)

29 Dumb Things Finance People Say (BI)

Good luck!

 

Sunder’s List: Is College a Scam?

Roundup: S&P +0.50%, Dow +0.34%, Nasdaq +0.57%, Gold $1,244.10, London -0.11%, Germany +0.25%, France +0.58%. At pixel: Nikkei +1.31%, Hang Seng +0.26%

Hedge fund manager Stanley Druckenmiller has called IBM one of the “more high probability shorts” he’s seen in years, and declares Amazon Web Services (AWS) is “killing” the IT giant. Will the same argument work for Indian outsourcers? (SA, IT)

The government is looking to make a substantial hike in wages under NREGA. The rural development ministry has scrapped a panel headed by National Statistical Commission Chairman Pronab Sen and set up a new one to prepare a fresh index that would lead to more generous wage revisions. (ET, #nrega)

SEBI has sought greater disclosures from Indian promoters on details of shares pledged by them. (ET, #SEBI)

The Uttar Pradesh sugar industry is shutdown this sugar season in wake of the high cane price in the state. (ET)

KPMG: Most private power plants are operating at 60% of capacity due to non-availability of fuel and if the situation does not improve fast, Indian banks could be staring at a bad debt of more than Rs.1 trillion. (LiveMint, ENERGY)

Credential inflation is the rise in educational requirements for jobs as a rising proportion of the population attains more advanced degrees. The value of a given educational certificate or diploma declines as more people have one, thereby motivating them to stay in school longer. (Salon)

Good luck!

 

Sunder’s List: Taper, Part Deux

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Whenever the US Fed whispers the word “taper”, world markets get spooked. Here’s what you need to know for what lies ahead.

Even the best got it wrong

Goldman Sachs lost $1.3 billion when the Fed decided not to taper in September. It appears the bank was net short emerging market currencies, and “absolutely got annihilated” when the Fed unexpectedly postponed tapering. (SA)

The Fed is mostly dovish

Doves are officials who will lean on easy money, Hawks want it tight. The incoming Fed chairman, Janet Yellen, is an all out Dove. So it will take a lot of convincing to move towards tighter money.

FOMC-2014

The QE option cannot be un-invented

Now that it’s been used, and widely, it will always be with us. QE can be a very difficult habit to kick. Look at Japan. Still at it decades after its first foray. Even if the Fed manages to taper down to the bone, there will be other downturns, other recessions. When they come, whoever is in charge of the Fed will be expected to abide by the new rules and run the presses. (WSJ)

One of the costs of QE is the inability to exit QE

Tim Duy’s parsing of the FOMC minutes points to a Fed that increasingly desires to end the asset purchase program. And is becoming increasingly nervous they will need to pull the trigger on that option before the data allows. That means that tapering is not data dependent. (EV)

DM-powered lift to EMs

Finally, it boils down to “where’s the beef?”

The connection between EM economic health and EM stock performance has been amazingly tight historically. For instance, since 2000, a 1% increase in emerging Asia industrial production has been associated with a nearly 5% gain in EM stock returns.

Over the past decade, a 1% rise in developed-market (DM) industrial production has tracked with a 2.4% increase in EM industrial production.

All said, staying underweight EM stocks poses substantial opportunity costs for investors. (AllianceBernstein)

Our takeaway

Forget about tapering till the new Fed Chairman takes office (mid-Jan). That’s still 45 days away. Hopefully by then, Rajan and his brain-trust at RBI would have come up with something to counter the taper. Plus, don’t discount the election factor in our markets. Usually, capital goods and cyclical stocks do well right about now.

Good luck!