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Commentary

Links: Lehman, ICICI, Billionaires, IIP and Sugar

  • WSJ: Lehman Torpedoed Lehman – A bankruptcy court examiner investigates and finds that senior Lehman executives fudged its balance sheet, kept the board uninformed and bumped up asset values.
  • ICICI Bank stops giving out free lifetime cards. What’s happening in there? They recently sold their CEO’s house. Insiders have started selling – two of them, including an ED, have sold between 70-100% of their holding in the last week. Building up fee income and clearing out assets? The stock has been doing amazingly well, up over 15% in the last month.
  • The Index of Industrial Production (IIP) data for Jan 2010 shows a 16.7% increase since Jan 2009. The data is unreliable, because the revisions are huge. Example: The December release last month showed an index value of 331.7 – it has been revised to 334. Similar revisions on the downside happen all the time. Better, perhaps to look at seasonally adjusted figures, available online through Ajay Shah’s blog, will probably get updated with Jan figures next week. In December the headline was over 16%, but the SAAR was 11%.
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  • Sugar seems to be in the news, and for a change because prices are going down. Perceptions of scarcity are changing, it seems, with ex-mill prices falling to Rs. 34 from Rs. 40. Sugar is a highly political industry and Maharashtra/UP are the big players. Sugar companies make money – 3-4 rupees a kg – from by-products like mollasses or co-generated power, but both have political controls like how much you can store, who gets paid for excess power etc. Global prices are also on the way down, but nowhere near the cycle lows.
  • China might increase rates, from accelerating inflation, says Bloomberg. Inflation in China has reached 3.5%, which to India will seem like a fantastically low figure for a country growing, er, faster than us. But the fudging in China is of gargantuan proportions – when the data is bad, the response is usually to keep data hidden, or massage it appropriately. Yes, everyone’s doing it nowadays but China is the master of the art.
  • Forbes releases the list of worldwide billionaires, and Marketfolly highlights the “hedgies” (fund managers) on the list.