Chinese Buyers Defer and Default

Reuters does a pretty good job of putting together this story on how a Chinese city saved a small state-owned firm from going bankrupt by bailing out the holders of its commercial paper in full. Bank loans remain uncertain! FT reported on its website on 20th May that some Chinese buyers of thermal coal and iron ore are deferring […]

India on a Roll?

On Monday (7th May), India’s Finance Minister tried to undo the damage that his budget, presented in early March, had caused on investor sentiment towards India. More specifically, retrospective amendments to Indian tax laws and the implementation of General Anti-Avoidance Rules (GAAR) sowed confusion and led to heartburn. It was not so much that the […]

India: Drama of the Outlook Downgrade

Here is the S&P announcement on downgrading the outlook on India’s lowest investment grade credit rating. By and large, I think it is a reasonable decision. I am not ‘shocked‘. It is interesting that the linked BS article talks of Indian FinMin officials expecting an upgrade. That shows how far they are out of touch […]

Gavyn Davies ‘Fails’ the CFA Test

In an FT piece, Gavyn Davies makes the case for equities for the long-term, from here on. He has a chart on the current after-tax profit as a % of GDP in the US. It is at the highest. Now, he considers the argument made by James Montier about the mean-reversion in profit margins and […]

Rational Markets

The VIX index – the index of implied volatility derived from ‘at-the-money’ options on the S&P 500 Stock Index – is now 15.64%. At the beginning of the year, it was 23.4%. That is, the level of volatility that option buyers on S&P 500 Index are willing to pay for. In other words, they do […]

Innovation, RIP

What is in common between the Reserve Bank of India, the Dodd-Frank Bill and the Pharmacists and Lawyers’ Professional Trade Bodies in Germany? Let us consult ‘The Economist’: One local bank boss says the RBI “runs a repressed financial system which is intolerant towards innovation. If the US was at 90 out of 100 in […]

Why This Kolaveri, Di?

Some friends alerted me to this important comment in the MINT on how India’s farmers are rationally expecting another loan waiver and refusing to pay off their loans. Before the last general elections, they got a loan waiver. You can’t blame them for hoping to get another now. Their expectations have been set by the […]

Central Banks: Contrasts in Asia-Pacific

Reserve Bank of Australia: surprise inaction Last week, the Reserve Bank of Australia surprised us by leaving the overnight cash rate (the official cash rate) unchanged at 4.25%. Most of us had anticipated a rate cut and, in fact, thought it was a shoo-in, given weak trends in retail sales, building approvals and employment. In […]

BoJ Joins the Race

At Tuesday’s monetary policy meeting, the Bank of Japan inched closer (a lot closer?) to joining the European Central Bank and the Federal Reserve Board of the US in blanketing the world with money. Quite a bit of confusion is evident in the English translation of the Bank of Japan decision. I, for one, have […]

‘Power’less in India

The price that India is beginning to pay for the entitlement politics practiced, with very few interruptions, since Independence is high and is climbing. Industrialists from the prosperous industrial town of Coimbatore protested against the prolonged interruptions to the power supply: Members of 31 industrial associations and their workforce staged a demonstration at Gandhipuram in Coimbatore on […]

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