Monday, July 23, 2012
As seen in old Hindi movies, trade unions, on back on militants, are creating problems for businesses to grow. This has been phenomenon in Gurgaon for quite sometime. The violence at Maruti Suzuki's Manesar
factory, which killed one senior employee and injured close to 100
others, bodes ill for the future of not just Maruti but also the
industrial hub of NCR.
The Japanese way
Gurgaon region
Burning colleague is a brutal act and can not be justified under any circumstances. I feel the community is still premature to digest Gurgaon success (only because it is adjacent to lively Delhi). If "Jatts-Gujjars" society, government continue to do nothing about these situations, there are little chances of making corporates stick to this part of the world.
Monday, July 23, 2012 0
Saturday, June 16, 2012
Slower growth and high volatility, Reserve bank is expected to cut Repo and Reverse Repo rates by 25 basis points in its policy review on Monday, 18th June, 2012.
What are current rates?
Repo Rate - 8%
Reverse Repo Rate - 7%
RBI has room to support economic activity as industrial production growth remains weak and inflation is under sub 10% level.
The industrial production grew at just 0.1 per cent from a year ago in
April. Meanwhile, the wholesale price index based inflation rose to 7.55
per cent in May from a year ago because of higher food and fuel prices.
Bloomberg survey on Reserve Bank of India policy suggests all major economists predicting 25 basis points rate cut. Only Religare and Bank of Baroda economists are predicting 50 basis points, rest all either suggesting 25 basis points or no change.
It seems rate cut has become a necessity and Reserve Bank has no option but to adhere to above estimates. I hope some good days coming for consumer and corporate segments. However, RBI can surprise market with 50 basis points bold move or even make it remain as it is. All eyes on policy review on 18th June at 11 a.m.
Saturday, June 16, 2012 0
Earlier this week, ratings agency Standard and Poor's raised concerns over India's investment grade ratings and said India could be first BRIC nation to lose this grade status. This event was rather predicted as India factory output data came flat in April. I am not a big fan of S&P or Moody ratings, this reminds me how they failed during 2008 crisis to correctly rate derivatives instruments. If they can't rate few instruments, how can they rate giant economies. Having said this, I would concentrate not on rating agencies but mainly on Indian economy.
Recently, I heard one of friend said "India is destined to grow but China is determined to grow". I thought a lot about this statement, checking the growth of other BRICs. China and Brazil both have slowed but India's GDP figures are the worst in last 9 years. It gives me a feel that "All is not well". I analyzed the situation mainly from three points:
1. Government failure since 1991 Liberalization: India was thought to grow due to its large customer base, high savings and foreign investment that would come up. A deeper look suggest that India was growing at 6% till mid 1980s and situation today is not different. With quarter ending March, growth was 5.3% as opposed to expected 6%. People who were involved in liberalization are considered to be GOD and VISIONARIES but rather than this, India grew on human optimism.
2. Finances: Rupee depreciation to 55-56 level, depressed government bond yield and high gross bad debts with restructured loans in Banks. RBI firepower is limited to push up rupee, but we still feel decent as oil prices went down luckily. Brent is trading in range of 81-83 dollars a barrel. Banks are forced to buy government bonds, more borrowing means corporates can not raise much.
3. Politics and corruption: Baba Ramdev estimates 10 lakh crores of Indian black money sitting abroad. This much money can not be made by fair practices and made to sit idle in a foreign land. Policy is at complete standstill, coalition government is unable to pass key reforms of FDI. Over 10 lakh crores of government revenue was sacrificed by ManMohan Singh for coal blocks. Reason given by his government was we want poor to benefit, I believe if this was the intention then government should have taken this money and distributed to poor by creating more true jobs. All knows how much money in getting looted by UPA flagship money making scheme of NREGA (National Rural Employment Guarantee Act).
Perhaps India will bounce back. And if that doesn't happen, there could be a miracle where public rise to the occassion and excercise right to vote and throw out this corrupt government. I am still bullish about India, remember "India is destined to grow" and would bet my money on it. Hopefully the small pieces of growth & economy will start coming togther sooner than later.
Sunday, May 20, 2012
JPMorgan Chase, the biggest U.S. bank by assets, suffered a trading loss of at least $2 billion from a failed hedging strategy. This post looks at deeper reason and analysis of what triggered this loss.
What happened?
It is believed after the entire loss math that JP Morgan did hedging or rather entered into bets with CDX family of investment grade, popularly known as Markit CDX IG. The Markit CDX North America Investment Grade Index is composed of 125 equally weighted credit default swaps on investment grade entities, distributed among 6 sub-indices: High Volatility, Consumer, Energy, Financial, Industrial, and Technology, Media & Tele-communications. Markit CDX indices roll every 6 months in March & September. Current series is 18.
With index, your exposure is broken into various assets rather than one CDS or company. Since it was Investment Grade, JP Morgan believed these companies would never default or credit spreads would remain low. Let us look at CDX IG Series 18 movement for 5 years, the credit spreads widended in April and May. If JP Morgan betted against increase in spreads and named it only hedge then trouble was round the corner.
Even if these companies may not default, but from pure trading perspective JP Morgan positions into CDX made a loss due to credit spread widening. Since the size of exposure was huge, losses were also huge.
The results:
1. JP Morgan stock tumbled on New York Stock Exchange. It has been more than 20% loss in stock prices since the news is out.
3. Likely changes in risk management of banks globally. CEO, Jamie Dimon opposition to Volcker rule to ban proprietary trading by big banks may be criticized.
Courtsey: Bloomberg, Markit
Sunday, May 20, 2012 0
Friday, May 11, 2012
According to Derrick Connell, corporate vice president of Bing, the update will roll out in the next few weeks. Users will be receiving a notification after signing up at the Bing site. “Increasingly, the Web is about much more than simply finding information by navigating a topically organized graph of links,” says Qi Lu, president of Microsoft’s Online Services Division. “We’re evolving search in a way that recognizes new user paradigms like the growth of the social graph, and will empower people with the broad knowledge of the Web alongside the help of their friends.”
i) Left which is core search results
ii) Middle containing snapshot which has useful links
iii) Right which has content from social media
Friday, May 11, 2012 0
Saturday, May 5, 2012
Last quarter Apple sold iPhones like banana in China, the figure touched 8 million. No doubt that it is the best smart phone available, still I think it is unsustainable going forward.
This exorbint sales helped Apple post record breaking profits in U.S. Analysts have praised the effort and seem too bullish for my liking. I have three main reasons why it seems tough:
A.) More than half of 30 million iPhones in China are unlocked and being used on unathorized China Mobile that limit the user experience to 2G only.
B.) Apple is far from getting right product for China market. It is a pain to use iPhone for texting as Chinese input on iPhone is not user friendly. Multiple Chinese bloggers and community experts have expressed their concern. The only option is to jailbreak and install third party software to make iPhone work smoothly.
C.) The third seasons arises from first two. Since Chinese users have unlocked and jailbreak their phone, they can download App Store applications for free. Chinese apps are limited Siri does not work in China.
Apple iPhone comes with entire ecosystem. In China, it seems this ecosystem is broken. Local players provide much better solution to Chinese users at fraction of cost.
Saturday, May 5, 2012 0
Google has come hard to big blog networks with huge links and term them as "Fake SEO" techniques. Below is screenshot of what big webmasters are receiving:
When did it start?
It seems all the buzz started with de-indexing of large link networks. It means that Google will remove these networks (inter-linked, self sustain planet of sites) from its crawler. Strangely, few of these networks have been running for years and made millions of dollars already.
Why is it happening?
Few of the reasons that I have collated are:
> Involvement in any artificial link networks
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