Macro and markets

Deepak Shenoy capitalmind.inMACRO AND MARKETS

Markets and Macro We’ll talk about  What the “Macro” picture means  Impact on markets  Specifics that apply to India  Questions: Raise your hand

Quiz Why was the Nifty locked in Upper Circuit, and closed over 20% up, on May 18, 2009?

Quiz #2 Why did the Nifty open at lower circuit and then recover intraday on Oct 17, 2007?

Quiz #3 Why did the market crash to lower circuit in May 2004?

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?

What? Elections War RBI regulationsNews about macroeconomics, geopolitical issues, market infrastructure impact markets, sometimes dramatically.

Macro: Not Directly Related News that isn’t related to a stock or sector  Political  Economic  Global  Natural Disasters

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

Indian Markets GDP Growth  Data Released every quarter  IMF Makes “estimates” now and then  Data Revised Like Crazy Inflation  WPI and CPI  Every Month

Various Macro Elements PMI IIP Deficits Bank Credit Money Liquidity Growth Supply

Market Macro Market Wide Index VIX Liquidity Indicators Exports And FII Flows Imports

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

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

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

Global Markets

Inflation

Trend Days

T-Bill Yields

Stocks Above DMAs

Steel Production

Nifty Including Dividends

Nifty P/E

Known Issues Bad Data Revisions Interference by Governments  Bailouts  QE Black Swans Very Likely Luck is underattributed

Questions Read: capitalmind.in Mail me: deepakshenoy@gmail.com Twitter: @deepakshenoy

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Macro and markets

by Deepak Shenoy on Oct 28, 2012

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