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Macro and markets


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

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

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  • 1. Deepak Shenoy capitalmind.inMACRO AND MARKETS
  • 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. Quiz Why was the Nifty locked in Upper Circuit, and closed over 20% up, on May 18, 2009?
  • 4. Quiz #2 Why did the Nifty open at lower circuit and then recover intraday on Oct 17, 2007?
  • 5. Quiz #3 Why did the market crash to lower circuit in May 2004?
  • 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. What? Elections War RBI regulationsNews about macroeconomics, geopolitical issues, market infrastructure impact markets, sometimes dramatically.
  • 8. Macro: Not Directly Related News that isn’t related to a stock or sector  Political  Economic  Global  Natural Disasters
  • 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. 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. Various Macro Elements PMI IIP Deficits Bank Credit Money Liquidity Growth Supply
  • 12. Market Macro Market Wide Index VIX Liquidity Indicators Exports And FII Flows Imports
  • 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. 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. 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. Global Markets
  • 17. Inflation
  • 18. VIX
  • 19. Trend Days
  • 20. T-Bill Yields
  • 21. Stocks Above DMAs
  • 22. Steel Production
  • 23. Nifty Including Dividends
  • 24. Nifty P/E
  • 25. Known Issues Bad Data Revisions Interference by Governments  Bailouts  QE Black Swans Very Likely Luck is underattributed
  • 26. Questions Read: Mail me: Twitter: @deepakshenoy