Macro and markets


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My presentation at Traders Carnival. It was about Macro data and how it impacts markets.

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Macro and markets

  1. 1. Deepak Shenoy capitalmind.inMACRO AND MARKETS
  2. 2. Markets and Macro We’ll talk about  What the “Macro” picture means  Impact on markets  Specifics that apply to India  Questions: Raise your hand
  3. 3. Quiz Why was the Nifty locked in Upper Circuit, and closed over 20% up, on May 18, 2009?
  4. 4. Quiz #2 Why did the Nifty open at lower circuit and then recover intraday on Oct 17, 2007?
  5. 5. Quiz #3 Why did the market crash to lower circuit in May 2004?
  6. 6. Quiz #4 21 years ago, Within 2 minutes of hearing the word “Regrettably”, US stock markets fell, Bond yields rose, and oil went up $3 per barrel. Why?
  7. 7. What? Elections War RBI regulationsNews about macroeconomics, geopolitical issues, market infrastructure impact markets, sometimes dramatically.
  8. 8. Macro: Not Directly Related News that isn’t related to a stock or sector  Political  Economic  Global  Natural Disasters
  9. 9. Market Impact No Left Perception Party in govt Good thing No P- Fear Notes, FIIs Bad thing will run away War raises oil Bad thing Prediction prices (Good for oil) Euro will Stupidity dissolve Bad thing today
  10. 10. Indian Markets GDP Growth  Data Released every quarter  IMF Makes “estimates” now and then  Data Revised Like Crazy Inflation  WPI and CPI  Every Month
  11. 11. Various Macro Elements PMI IIP Deficits Bank Credit Money Liquidity Growth Supply
  12. 12. Market Macro Market Wide Index VIX Liquidity Indicators Exports And FII Flows Imports
  13. 13. Delays Macro Data usually has a huge lag  Data appears months after it actually happens Reactions to news is usually immediate  Despite potential future revisions One time events like an Election result are exceptions
  14. 14. Variable Impact  Macro impacts different markets differently RBI raises Dollar Banks Auto/IRS Exporters rates RateGreece Exits Exporters Global Liquidity Broad Euro to Europe Markets Issue Market
  15. 15. Can Be Painful Michael Burry  Traded against Subprime Mortgages from 2005  Lost money for over two years!  Made a packet since that Soros  Held a massive trade against the British Pound  Could have been wiped out by the leverage Niederhoffer was Long Term Capital was Amaranth was
  16. 16. Global Markets
  17. 17. Inflation
  18. 18. VIX
  19. 19. Trend Days
  20. 20. T-Bill Yields
  21. 21. Stocks Above DMAs
  22. 22. Steel Production
  23. 23. Nifty Including Dividends
  24. 24. Nifty P/E
  25. 25. Known Issues Bad Data Revisions Interference by Governments  Bailouts  QE Black Swans Very Likely Luck is underattributed
  26. 26. Questions Read: Mail me: Twitter: @deepakshenoy
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