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On Slack: Boosting QE, Brexit Bulletin, Global Imbalances, Lehman Day, Sniffing Out the Truth and much more…

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Slack Logo2The Slack Discussions

The Slack group at Capital Mind Premium has been extremely active and if you haven’t been there (Premium subscribers only), pop us a note or login here using your premium credentials.

Here is a brief summary of some of the interesting things discussed there in the last few days:

#stocks: Goldman Says Investors Forget That Many Stocks Love Higher Rates

Amid all the hemorrhaging in dividend stocks whacked by higher bond rates, Goldman Sachs Group Inc. says investors are missing a chance in another group that usually benefits. (Link)

#stocks: Vedanta’s 132% Bond Return From Abyss Has Funds Expecting More

Vedanta Resources Plc rewarded its bravest bond holders with a 132 percent return for sticking with the group after its financial distress in 2015. As commodity prices rebound, some investors say the rally isn’t over. (Link)

#general: Why Bollywood’s investment model is not working

Walt Disney’s move to shuts its Hindi film-making business underscores a rethink among corporate entities about backing big-budget, high-risk movies. (Link)

#macronomics: Japan Looks to Bring in More Foreign Workers as Population Falls

“Probably a lot of strategies are going to be adopted in the coming few years,” Shibayama said. “I don’t think it’s a fixed goal of the government but, in my opinion, doubling the number of foreign workers cannot be avoided in this global market situation. We have to make a sustainable system for accepting more and more foreign workers.” (Link)

#bonds: Forced Selling from Risk Parity Funds Will Push Up U.S. Real Treasury Yields, Says BofA

Some $50 billion worth of bond sales from risk parity portfolios is just one of the reasons why Bank of America Merrill Lynch is flip-flopping on its favourite trade of 2016, now recommending that investors begin to short inflation-protected Treasury debt. (Link)

#stocks: Volatility Erupts in the World’s Biggest Market

Volatility has reawakened in the $5.1 trillion foreign-exchange market, as traders start to imagine life without ultra-easy monetary policy.
The impact is greatest in the currencies with most at stake from an end to years where stimulus only got more generous — the so-called high yielders. A gauge of expected swings in emerging-market currencies has surged above an equivalent measure for developed markets by the most since May. (Link)

#macronomics: Fed Running Out of Forward Guidance as Markets Exhaust Key Tool

Janet Yellen says one of the tools the Federal Reserve can use to fight the next recession is a pledge to keep interest rates low for a long time, but the economist who led the intellectual charge to deploy such forward guidance isn’t so sure. (Link)

#bonds: The Perils of the Ultra-Long View on Bonds

(Link)

#general: Lehman Day and Identity Theft

When do you think we’ll stop commemorating the anniversary of the Lehman Brothers bankruptcy? It is really amazing the extent to which the financial industry is still stuck in the shadow of 2008. Or maybe it isn’t; maybe we have moved on too quickly and failed to learn the lessons of 2008, and the only cure is to wallow in Lehman’s failure on each anniversary for the rest of time. (Link)

#general: Companies Get Paid to Be Junk in Europe

Investors are now literally paying European companies to borrow. Sanofi, a French drugmaker, just became the first nonfinancial private company to issue debt that yields less than zero, according to Bloomberg News. Henkel, a German household products maker, quickly followed suit. (Link)

#bonds: Bank FDs Vs Mutual Funds: Which Is Better To Earn Regular Income?

Apart from falling interest rates, the tax factor is also one of the reasons why financial planners suggest systematic withdrawal plans (SWP) in debt mutual funds to be a better option for investors – particularly those in higher tax brackets – looking to earn a regular income from a lump sum. (Link)

#general: India loses solar power appeal in WTO against US

India lost its appeal at the World Trade Organization in a dispute over solar power on Friday, failing to overturn a U.S. complaint that New Delhi had discriminated against importers in the Indian solar power sector.
The WTO’s appeals judges upheld an earlier ruling that found India had broken WTO rules by requiring solar power developers to use Indian-made cells and modules. (Link)

#bonds: Dynamic vs Balanced Funds

(Link1) (Link2) (Link3) (Link4)

#bonds: Shifting NPS account: Sectors in NPS, Form ISS

(Link)

#macronomics: Why Won’t the Fed Raise Rates?

When the Federal Reserve’s Open Market Committee (FOMC) meets in the coming week, there will be pressure from various quarters to raise the federal funds rate. Jamie Dimon, chairman of JP Morgan, has stated blankly “Let’s just raise rates.”  Furthermore, he has said a quarter point is just a “drop in the bucket.”  (Link)

#general: The Greatest Bubble of All-Time?

(Link)

#general: Light Wave

In just over two years, a state-owned company has ushered in an LED revolution. It has brought down prices, disrupted the marketand made the industry nervous. Whats next? (Link)

#bonds: All advisers could soon be accountable to Sebi

With Sebi’s proposed changes to the investment adviser regulations, advisers may not have to register with the regulator. All persons giving financial advice will be deemed to be under Sebi’s ambit. (Link)

#bonds: Naming Schemes

Here’s a question: which is the most commonly used, ambiguous word in the names of mutual fund schemes in India?  By my count, it is the word, ‘Opportunities,’ which currently features in the names of 49 open-end schemes.  It is followed by the words, ‘Advantage’ and ‘Plus.’  (Link)

#macronomics: Warning Indicator for China Banking Stress Climbs to Record

A warning indicator for banking stress rose to a record in China in the first quarter, underscoring risks to the nation and the world from a rapid build-up of Chinese corporate debt.
China’s credit-to-gross domestic product “gap” stood at 30.1 percent, the highest for the nation in data stretching back to 1995, according to the Basel-based Bank for International Settlements. Readings above 10 percent signal elevated risks of banking strains, according to the BIS, which released the latest data on Sunday. (Link)

#fx-commodities: Rupee Forecasts Jump as Rally Shows Strategists Were Too Bearish

Year-end forecasts for India’s rupee are rising at the fastest pace in 11 months as the currency’s rally this quarter seems to have taken strategists by surprise. (Link)

#general: EBITDA: Sniffing Out the Truth

Financial analysts are constantly seeking the Holy Grail when it comes to financial metrics, and to some financial number crunchers, EBITDA (Earnings Before Interest Taxes Depreciation and Amortization – pronounced “eebit-dah”) fits the bill. On the flip side, Warren Buffett’s right hand man Charlie Munger advises investors to replace EBITDA with the words “bullsh*t earnings” every time you encounter this earnings metric. We’ll explore the good, bad, and ugly attributes of this somewhat controversial financial metric. (Link)

#options: Trade Sizing is Critical When Volatility Explodes

If you’re feeling like a good friend just returned from a long trip abroad, you aren’t alone!
Volatility with a capital “V” hit global equity markets in September and there’s every reason to believe it could linger – at least in the near term. (Link)

#macronomics: Europe’s Bond Selloff Is Taking the Urgency Out of Boosting QE

(Link)

#macronomics: Market Resilience Post-Brexit Masks Underlying Risks, BIS Says

The way financial markets recovered from turbulence in the aftermath of Britain voting to leave the European Union could be deceptive, the Bank for International Settlements warned. (Link)

#bonds: One of the Largest Electronic Traders Won’t Touch Some Bond ETFs

One of the world’s largest electronic market makers won’t touch increasingly popular exchange-traded funds tied to bonds because the underlying securities are too hard to trade. (Link)

#bonds: Bank Risks and Bond Systems

(Link)

#macronomics: Rising Global Imbalances Should Be Ringing Alarm Bells, Says HSBC

Global current-account imbalances are back, bringing with them deflationary forces and slamming the brakes on global growth.
That’s the sobering conclusion of an HSBC Holdings Plc report published on Thursday, which laments that an effective, international policy response to the problem is likely to be a long way off. (Link)

#stocks: Equities on a high! Sensex on track to hit 75K in next 5 years

(Link)

#stocks: Indian markets may hit new highs in next few days; we are in a fabulous bull market: Porinju Veliyath

Porinju Veliyath, MD & Portfolio Manager at Equity Intelligence India is of the view that Indian markets may hit a new high in the next few days. (Link)

#macronomics: Banks Are Now Too Scared to Even Make Money

Banks have become too regulated and too scared of the risks to do what they should be doing, greasing the flows of money between countries. (Link)

#bonds: Paytm Payments Bank ties up with banks, MFS ahead of Diwali launch

Paytm payments bank has lined up a gamut of services ahead of its payments bank launch on Diwali day. The company has tied up with IndusInd Bank, ICICI Prudential and HDFC Mutual Fund to offer banking, insurance and mutual fund services to its customers. (Link)

#general: Kenneth Rogoff: The case against cash

Scaling back paper currency would hardly end crime and tax evasion, but it would force the underground economy to employ riskier options. (Link)

#stocks: Is Dominos India Toppling Over?

(Link)

#macronomics: Two of Fed’s Own Primary Dealers Warn Shock Hike Awaits Markets

Two of the Fed’s 23 preferred bond-trading partners — Barclays Plc and BNP Paribas SA — are betting against their peers and the bond market by forecasting officials will raise rates Wednesday. (Link)

#macronomics: Brexit Bulletin: Theresa May Woos Wall Street

And a dismissal of hard-line rhetoric from eastern European nations that they might veto a Brexit deal. (Link)

#backtobasics:

How Short is ‘Short Term’?Link
Stay Skeptic, Stay Happy- Invest without worriesLink
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