Capitalmind
Capitalmind
Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
General

On Slack: Amex Overhaul, Rockefeller fortune, LIC's Vakalapudi and more….

The Slack Discussions

The Slack group at Capital Mind Premium has been extremely active and if you haven’t been there, pop us a note by replying to this email. (If you’re a trial member this probably sound like Greek to you; it will be available when you sign up!)

A brief summary of some of the interesting things discussed there in the last few days:

Slack Logo2

#general: AmEx to overhaul management, cut jobs to slash costs by $1b

American Express Co said it would overhaul its management, streamline its marketing operations and cut jobs as it looks to reduce $1 billion in costs over the next two years.

The company is facing stiff competition in the co-branding business and has lost lucrative long-term contracts from companies such as Fidelity Investments and warehouse club operator Costco Wholesale Corp. (Link)

#general: Preparing for the Collapse of the Saudi Kingdom

(Link)

#general: Heirs to Rockefeller oil fortune divest from fossil fuels over climate change

The heirs to the fabled Rockefeller oil fortune withdrew their funds from fossil fuel investments on Monday, lending a symbolic boost to a $50bn divestment campaign ahead of a United Nations summit on climate change.

The former vice-president, Al Gore, will present the divestment commitments to world leaders, making the case that investments in oil and coal have an uncertain future. (Link)

#general: Microsoft Working with Indian Government to Link Skype with the Aadhar ID

Microsoft president Brad Smith who is in India spoke with the media in a meeting. He revealed that Microsoft is currently working with the Indian government to link Skype with the Aadhar database so that it can be used to make authenticated calls with government institutions and others. (Link)

#general: Four banks plan to sell Kingfisher Airlines’ assets to ARCs

As many as four banks are contemplating selling assets of beleaguered air carrier Kingfisher Airlines to asset reconstruction companies (ARCs) to recover part of their dues. (Link)

#general: How to make Rs 6 Cr in a day doing nothing

Here is a satirical look at how a startup can make money by taking a leaf out of a company’s savvy move to bring a coveted product to the masses at an unprecedentedly low price. (Link)

#general: Foxconn’s mum on $5 billion investment worries Maharashtra government

Foxconn Technology’s silence on the proposed $5 billion investment in Maharashtra is worrying the state government, as the Taiwanese electronics contract manufacturer hasn’t yet sent a proposal to acquire 300 hectares of land to set up a factory.

In August last year, Foxconn had said that it would invest $5 billion (roughly Rs 32,000 crore) in Maharashtra in the next five years after the state government agreed to allot it 300 acre of land to set up a plant. The company had also signed a memorandum of understanding (MoU) with the Maharashtra government in this regard. (Link)

#general: IMF re-elects Christine Lagarde to second five-year term as chief

Lagarde, the only candidate nominated for the post, was elected ‘by consensus’, the IMF said in a statement. (Link)

#general: Meet LIC’s Agent Vakalapudi

The author finds out what it took for Venkateswara Rao Vakalapudi to become a record-breaking insurance agent. (Link)

#general: All of the World’s Stock Exchanges by Size

(Link)

#macronomics: India experiencing pronounced economic slowdown: Ambit

While most firms have predicted an above-7-percent growth for the Indian economy in the current fiscal year, Ambit Capital Research has said the country is experiencing “pronounced economic slowdown” and could grow 6.8 percent in 2015-16.

India’s gross domestic product (GDP) growth may be lower than that recorded in the previous fiscal, the research firm told in a note to Press Trust of India. (Link)

#general: Even Reputed Analysts Indulge in Pump N’ Dump. They Publicly Recommend Buy of a Stock While Privately Dumping It

(Link)

#general: TCS to increase notice period to three months from March

“The company has reviewed the Notice Period policy and based on employee feedback and prevailing practices decided to revert to the earlier notice period of 90 days served with effect from March 1, 2016. This will be applicable to India-based employees,” Ajoyendra Mukherjee, executive vice president and global head – HR at the company, said in a post on the company’s internal site. (Link)

#general: Maruti Suzuki suspends production at Haryana units owing to Jat protests

Widespread protests by Jats seeking caste-based reservations in several parts of Haryana has crippled the supply of components to automakers, forcing players like Maruti Suzuki to temporarily suspend production at its two plants in the state. (Link)

#general: Working 24X7, Modi puts stamp on Budget

With less than 10 days to go before its presentation in Parliament, Finance Minister Arun Jaitley and his team are busy putting together what’s expected to be a landmark Budget. Prime Minister Narendra Modi and key officials in his office are also as closely engaged in the exercise. ET spoke to various officials to piece together how Budget-making under this government is proving to be very different from what it used to be. (Link)

#stocks-from the past: Nov sales to be flat, lost exports in Nepal: Bajaj Auto CFO

Dsa says the company lost some numbers in Nepal because of the disturbance i
n that country. He says the response to the new Avenger series has been encouraging, and there have been 7000 bookings already. (Link)

#stocks-from the past: Dabur Q3 net up 13%, Nepal hits sales; volume growth at -2.5%

The overall demand environment remained tepid in the third quarter with some key segments showing deceleration while competitive intensity was at a high. Despite a sharp fall in growth rates in most consumer products segments, Dabur continues to focus on brand-building and market expansion programmes that will pave the ground for future growth. (Link)

#general: If you can’t act when oil is at $30/barrel, when will you: Jahangir Aziz

The JPMorgan Chase chief Asia economist on why India should focus on domestic consumption. (Link)

#general: Oil prices likely to remain low for 3-5 years: Mukesh Ambani

(Link)

#general: Reliance Jio will launch 4G services later this year: Mukesh Ambani

Mukesh Ambani, India’s richest person, today said Reliance Jio will be ready to commercially launch its much talked about 4G telecom services in second half of 2016, offering 80 per cent of Indians high-speed mobile internet as well as voice services. (Link)

#general: Cars from Chennai take the coastal route to Gujarat; Hyundai takes lead

To begin with, the direct ro-ro service will be fortnightly. Around 2,000 cars can be transported in a single voyage. The Hyundai cars arrived at Chennai port from the company’s Sriperumbudur plant by road through trailers. “In the return voyage, we are talking to manufacturers to move their vehicles to southern destinations,” he said. The foreign flag vessel has been permitted by the DG Shipping to do the coastal run in Indian waters for the next five years, he said. (Link)

#macronomics: This Crash Will Be Bigger than 2008 – Here’s Why

Bert Dohmen, founder of Dohmen Capital Research, is uber-bearish and believes that it is time for investors to panic (before everyone else does) given a potential collapse of the stock market greater than what we saw in 2008. (Link)

#macronomics: PropTiger Q3 Report FY16: Real Estate Sector May Be on the Path of Revival

Things are looking up for the real estate sector in the country. According to PropTiger DataLabs’ report for the third quarter (Q3) of the financial year 2015-16, the sales spiralled northwards for the first time in the past 10 quarters. When compared with around 49,000 units in the second quarter of FY16, the sales went up to around 53,000 units in the third quarter. There was also a rise in the number of launches even after adjusting for the normal increase seen during the festival time. (Link)

#general: Porinju Veliyath Escapes Melt-Down in Tainted Stock (And Makes 500% + Gains from It)

Porinju Veliyath’s dexterity in buying and selling stocks ensured that he got out of one of his favourite stocks just before it got hit by a regulatory taint and suffered a melt-down. Porinju pocketed a fortune from the stock though investors who followed his footsteps may not have been as lucky. (Link)

#general: At Rs 4 lakh crore, bad loans exceed market value of PSU banks

For every Rs 100 parked in shares of public sector banks, investors carry the burden of Rs 150 as bad loans, which have cumulatively ballooned to Rs 4 lakh crore or 1.5 times the market value of these lenders.

In comparison, bad loans of private sector banks are just about 6.6 per cent of their total valuation. (Link)

#general: Boris Johnson Backs Campaign to Leave EU

The London Mayor says he did not want to go against David Cameron but after “a great deal of heartache” felt he had no choice. (Link)

#general: Railway budget: in danger of getting derailed?

Revenue increased just 5.8% from a year ago in the first 10 months of the current fiscal against 12-20% growth in the same period of the past three fiscal years. (Link)

#macronomics: The fiscal company we keep

Ahead of the Union budget, a look at the countries India can compare itself with in fiscal matters. (Link)

#macronomics: Amit Mitra as GST Committee chief is a masterstroke

West Bengal finance minister Amit Mitra’s understanding of the implications of the Goods and Services Tax (GST) steps, both politically and also for the industry, will help the NDA government in creating a consensus on contentious issues. It also improves the chances of getting the GST Bill passed in Parliament. (Link)

#macronomics: How ‘black money’ saved the Indian economy

Kaushik Basu, the chief economist of the World Bank and former chief economic adviser to the Indian government, says the nation’s tradition of petty corruption helped India avoid the worst of the banking crisis that has crippled most other large economies in the last few years.

It is an extraordinary claim for such an influential figure to make but, as he says in his new book, An Economist in the Real World, “economics is not a moral subject”. (Link)

#stocks: Airtel steps up 4G offensive, looks at offering 135 Mbps

Deployment is part of firm’s Rs 60,000 cr Project Leap programme to meet growing demand for voice and high speed data. (Link)

#general: India’s $16 billion wage bonanza may force Jaitley to cut capex

A $16 billion pay rise for India’s public servants and costly food and farm programmes could force the country’s finance minister to cut capital spending in its annual budget, officials and economists say.

The spending pressure on Finance Minister Arun Jaitley threatens to worsen imbalances in India’s $2 tr
illion economy as consumption outpaces investment, undermining Prime Minister Narendra Modi’s promise of better jobs for its 1.3 billion people. (Link)

#general: Volatility no sweat for Indian investors

Market volatility is yet to dent the confidence of domestic investors. Equity ownership of domestic institutional and retail (small) investors reached a record high at the end of the December 2015 quarter.

Domestic investors owned 22.1 per cent of BSE 500 companies, worth Rs 19.8 lakh crore, at end- December. Domestic ownership (excluding promoters’ stake) of corporate India was up 210 basis points (bps) on a sequential basis in the past quarter. The previous high was 20.4 per cent at the end of the June quarter. A basis point is one-hundredth of a per cent. (Link)

#stocks: IDFC Alternatives in talks to buy Welspun Renewables assets for Rs.10,000 crore

Negotiations, including on the value of the deal for 700MW of wind and solar energy, are still on and may take about two months to conclude. (Link)

#macronomics: No Proof Required: Believe it, GDP data is right

Those who have seriously questioned it owe an apology to the CSO for doubting its authenticity and the integrity of the statisticians. (Link)

#macronomics: Sovereign Wealth Funds May Sell $404 Billion of Equities

Sovereign wealth funds may withdraw $404.3 billion from global stock markets this year if oil prices remain in the $30 to $40 per barrel range, according to the Sovereign Wealth Fund Institute.

Wealth funds, which have amassed about $7 trillion in assets, excited about $213.4 billion of listed equities last year as the slump in crude oil put pressure on domestic finances, the Las Vegas-based SWFI said in an e-mailed report sent Monday. (Link)

#general: LIC buys shares worth Rs 10,400 cr in 18 Sensex cos in Q3

The holding of Life Insurance Corporation (LIC) declined in five other blue-chips in the third quarter from the level seen in the preceding three months, showed an analysis of the shareholding pattern of the Sensex constituents. (Link)

#general: In an uncertain stock market caution is the key for investors

(Link)

#fixed-income: Rating Changes and Debt Mutual Funds

(Link)

#general: The next big shift in the global oil market is underway, and it centres on India

Although the oil world continues to watch Saudi Arabia and the US with baited breath, it also should probably be keeping an eye on India.

The biggest headline coming out of the International Energy Agency’s latest oil market outlook is that the IEA doesn’t expect oil prices to get back to normal until 2017, but one tidbit from the report shows the potential for another big energy shift on the global markets’ doorstep: India is set to surpass Japan as the world’s third-largest consumer of crude oil, behind the US and China. (Link)

#general: Bizarre? “Michael Burry is focusing all of his trading on one commodity: Water”

(Link)

#macronomics: Yuan Weakens as PBOC Cuts Reference Rate by Most in Six Weeks

The yuan fell as the People’s Bank of China cut its daily reference rate by the most in six weeks, damping confidence that the exchange rate will be kept stable before a meeting of the Group of 20 central bankers and finance ministers.

The currency fell 0.09 percent to 6.5288 a dollar as of 10:06 a.m. in Shanghai, according to China Foreign Exchange Trade System prices. In Hong Kong’s offshore market the yuan dropped to the lowest in almost two weeks. The central bank’s fixing was cut by 0.17 percent, more than the decline of about 0.015 percent that Australia & New Zealand Banking Group Ltd. strategist Irene Cheung said she’d been expecting. (Link)

#macronomics: GIFT to create regulatory crisis for RBI, SEBI: Mistry

Percy Mistry, chairman of the committee which drafted the report on developing Mumbai as an International Financial Centre (IFC), has opposed Narendra Modi government’s proposal of following Gujarat’s GIFT City model in Mumbai without regulatory ring-fencing and basic infrastructure. Replying to a query on promotion of GIFT City, near Ahmedabad and Mumbai, as IFC during Make in India Week last week, Mistry said this kind of emotive exuberance is obscuring the fundamental underlying policy failures and foundational deficiencies in the Indian economic and financial system with advertising slogans and mega events that distract attention from real problems. (Link)

#general: A New Breed of Trader on Wall Street: Coders with a Ph.D

(Link)

#macronomics: No Proof Required: Believe it, GDP data is right

Those who have seriously questioned it owe an apology to the CSO for doubting its authenticity and the integrity of the statisticians. (Link)

#general: The U.S. States Where Recession Is Already a Reality

(Link)

#macronomics: Pushing GST Right Now Is like Falling for the Sunk Cost Fallacy; Not worth It

Nearly a decade after it was first proposed, the goods and services tax (GST) seems to be something the NDA government is unwilling to let go, even though its real benefits may be illusory. One suspects that it is the sunk cost fallacy at work- where the sheer effort put in by various central and state governments into making GST a reality has got them psychologically invested in an idea about which most states seem only to have developed a lukewarm interest.(Link)

#backtobasics:

Global Asset Allocation: A Survey of the World’s Top Asset Allocation StrategiesLink

The Global View with Howard MarksLink

divider

Disclaimer

Nothing in this newsletter is financial advice and should not be construed as such. Please do not take trading decisions based solely on the matter above; if you do, it is entirely at your own risk without any liability to Capital Mind. This is educational or informational matter only, and is provided as an opinion. 

Disclosure: The authors at Capital Mind have positions in the market and some of them may support or contradict the material given above, or may involve a direction derived from independent analysis.