The document provides an economic update and outlook for December 2011. It discusses the ongoing debt crisis in the Eurozone and whether the Euro will survive. It notes the ideological differences between Germany and other countries in their approaches to dealing with the crisis. Domestically, it comments on the reversal in stance by the Indian opposition on retail FDI and the potential impact on economic momentum. Inflation is expected to fall by the end of the fiscal year. The outlook is cautiously positive on long-term debt as interest rates may fall over the next 2-3 years.
Investors are flocking to safe assets like US and German sovereign bonds despite negative real returns, due to increased disaster risk and economic uncertainty. This behavior, called "disaster economics", has consequences for monetary policy as central banks must work to reduce fear and build confidence. While low rates are partly due to central bank actions, the flight to safety suggests investors prioritize capital preservation over returns. If this psychology persists, it signals challenges for stimulating growth and could portend a prolonged period of low rates.
This document discusses the current economic challenges and provides suggestions for protecting assets during difficult financial times. It outlines six major obstacles slowing economic recovery, including accumulated debt, wealth destruction, declining incomes, the slow pace of government rescues, sinking confidence, and how to finance government programs. Specific concerns mentioned include declining asset prices, taxes, inflation, and unknown factors. The document recommends building cash reserves, selling bonds, considering inverse ETFs and gold funds, avoiding high-risk investments, and being wary of fraud. It offers to provide ongoing information and answers questions to help investors navigate the challenging environment.
Lpl Financial Research Weekly Market Commentary Nov. 19th, 2012chrisphil
1. The fiscal cliff is causing significant investor anxiety as evidenced by a 7% drop in the S&P 500 since mid-September.
2. Investors are experiencing the five stages of grief around the fiscal cliff: denial, anger, bargaining, depression, and acceptance. Most investors have moved past denial and are currently in the bargaining stage.
3. A short-term or partial deal that kicks the can down the road may increase market volatility while a comprehensive long-term solution would reduce uncertainty and increase business and consumer confidence.
The document provides an economic update and outlook for June 2011, noting renewed concerns over sovereign debt in Europe, particularly for Greece, and the potential implications of a default by a Eurozone country. It recommends investors either look at relatively safer international markets like the US and China through ETFs or more globally oriented sectors, and also discusses using covered call strategies during periods of range-bound markets. The debt markets outlook expects rates to remain subdued due to expected impact of higher diesel prices on inflation.
The document summarizes the performance of Greenlight Capital investment funds in Q4 2011 and for the full year 2011. The main funds returned between 8.5-9.7% in Q4 and 1.9-2.9% for the full year. The letter discusses challenges in the market environment and outlines the firm's investment strategy and positions.
Agcapita is Canada's only RRSP and TFSA eligible farmland fund and is part of a family of funds with over $100 million in assets under management. Agcapita believes farmland is a safe investment, that supply is shrinking and that unprecedented demand for "food, feed and fuel" will continue to move crop prices higher over the long-term. Agcapita created the Farmland Investment Partnership to allow investors to add professionally managed farmland to their portfolios.
The document discusses several topics:
1) Taiwan and China signed a trade agreement representing a form of detente between the two entities embroiled in a sovereignty dispute for over 60 years.
2) The agreement opens markets in key sectors like banking, insurance, and movies, reflecting thoughts that the "new normal" is a world of changing risks and opportunities during this global economic transition period.
3) Protecting one's wealth in this epochal transition requires proactive risk assessment and management as debt levels globally are over 4 times annual global GDP and resolving this debt will be deflationary for years to come.
This document summarizes the key findings from an analysis of past deleveraging cycles in the US economy in the mid-1970s and early 1990s. Some of the main points include:
- Past deleveraging cycles were actually good periods for stock market performance and saw leadership from consumer discretionary and technology stocks.
- Deleveraging is a lagging phenomenon that typically occurs late in an economic slowdown.
- Housing activity, as measured by building permits, tended to bottom out early in past deleveraging cycles and then rise steadily through the cycle.
- Inflation tended to decline during deleveraging periods, suggesting disinflation may lie ahead.
- Mon
Investors are flocking to safe assets like US and German sovereign bonds despite negative real returns, due to increased disaster risk and economic uncertainty. This behavior, called "disaster economics", has consequences for monetary policy as central banks must work to reduce fear and build confidence. While low rates are partly due to central bank actions, the flight to safety suggests investors prioritize capital preservation over returns. If this psychology persists, it signals challenges for stimulating growth and could portend a prolonged period of low rates.
This document discusses the current economic challenges and provides suggestions for protecting assets during difficult financial times. It outlines six major obstacles slowing economic recovery, including accumulated debt, wealth destruction, declining incomes, the slow pace of government rescues, sinking confidence, and how to finance government programs. Specific concerns mentioned include declining asset prices, taxes, inflation, and unknown factors. The document recommends building cash reserves, selling bonds, considering inverse ETFs and gold funds, avoiding high-risk investments, and being wary of fraud. It offers to provide ongoing information and answers questions to help investors navigate the challenging environment.
Lpl Financial Research Weekly Market Commentary Nov. 19th, 2012chrisphil
1. The fiscal cliff is causing significant investor anxiety as evidenced by a 7% drop in the S&P 500 since mid-September.
2. Investors are experiencing the five stages of grief around the fiscal cliff: denial, anger, bargaining, depression, and acceptance. Most investors have moved past denial and are currently in the bargaining stage.
3. A short-term or partial deal that kicks the can down the road may increase market volatility while a comprehensive long-term solution would reduce uncertainty and increase business and consumer confidence.
The document provides an economic update and outlook for June 2011, noting renewed concerns over sovereign debt in Europe, particularly for Greece, and the potential implications of a default by a Eurozone country. It recommends investors either look at relatively safer international markets like the US and China through ETFs or more globally oriented sectors, and also discusses using covered call strategies during periods of range-bound markets. The debt markets outlook expects rates to remain subdued due to expected impact of higher diesel prices on inflation.
The document summarizes the performance of Greenlight Capital investment funds in Q4 2011 and for the full year 2011. The main funds returned between 8.5-9.7% in Q4 and 1.9-2.9% for the full year. The letter discusses challenges in the market environment and outlines the firm's investment strategy and positions.
Agcapita is Canada's only RRSP and TFSA eligible farmland fund and is part of a family of funds with over $100 million in assets under management. Agcapita believes farmland is a safe investment, that supply is shrinking and that unprecedented demand for "food, feed and fuel" will continue to move crop prices higher over the long-term. Agcapita created the Farmland Investment Partnership to allow investors to add professionally managed farmland to their portfolios.
The document discusses several topics:
1) Taiwan and China signed a trade agreement representing a form of detente between the two entities embroiled in a sovereignty dispute for over 60 years.
2) The agreement opens markets in key sectors like banking, insurance, and movies, reflecting thoughts that the "new normal" is a world of changing risks and opportunities during this global economic transition period.
3) Protecting one's wealth in this epochal transition requires proactive risk assessment and management as debt levels globally are over 4 times annual global GDP and resolving this debt will be deflationary for years to come.
This document summarizes the key findings from an analysis of past deleveraging cycles in the US economy in the mid-1970s and early 1990s. Some of the main points include:
- Past deleveraging cycles were actually good periods for stock market performance and saw leadership from consumer discretionary and technology stocks.
- Deleveraging is a lagging phenomenon that typically occurs late in an economic slowdown.
- Housing activity, as measured by building permits, tended to bottom out early in past deleveraging cycles and then rise steadily through the cycle.
- Inflation tended to decline during deleveraging periods, suggesting disinflation may lie ahead.
- Mon
The document discusses the threat of economic stagnation in Western countries and the challenges of austerity. It argues that while austerity measures may seem moderate from a regional perspective, they have profoundly negative effects on individual crisis-struck countries. Stimulus packages implemented in response to the financial crisis should have been combined with structural reforms. Different types of recessions require different policy responses - balance sheet recessions like in the US need continued fiscal support, while Southern European crises stem more from structural issues and require fiscal consolidation paired with reforms.
The document discusses highlights for 2012 including:
1) An upward bias for stocks in the range of 1,100 to 1,550 and low bias for interest rates in the first half of 2012, though headwinds and uncertainty may arise quickly.
2) 2012 will be a significant time of historical transformations as pressures build from unresolved issues like high global debt and political unrest, similar to the 1970s-1980s.
3) TSWM will maintain a well-thought-out asset allocation plan and conservative balance to mitigate emotional decision-making as volatility increases, relying on sound portfolio principles.
This newsletter discusses stocks as a long-term investment option despite market volatility. While 2011 saw fear in the markets similar to 2008, stocks have historically provided higher real returns than other assets over periods of 20 years or more. Specifically, stocks have returned an average of 6.7% annually after taxes compared to just 2.8% for bonds and 1.7% for treasury bills from 1871-2006. Currently, dividend-paying stocks appear reasonably valued relative to low interest rates and offer higher yields than GICs. The newsletter recommends owning dividend stocks as a way to earn income and hedge against inflation over the long run.
Viewpoint Newsletter from Clear View Wealth Advisors with a focus on the role of dividend-paying stocks and the inflation-deflation debate. Also includes links to the free financial roadmap tool.
The document discusses the performance of financial markets in 2012, noting that:
1) The U.S. stock market gained 16% in 2012 despite fears over issues like the European debt crisis and slow growth in China.
2) Bond yields fell unexpectedly in the U.S. and Europe continued to "muddle through" its debt crisis, with many European markets outperforming the U.S.
3) A report card on economic and market indicators shows improvements from 2010-2012, with corporate earnings and housing showing signs of recovery though inflation remained low.
- The Alchemy Capital Management investment fund suffered losses in the fourth quarter of 2007 from hedge fund failures and the effects of the credit crunch. Approximately 40% of the fund's allocation was directly or indirectly linked to credit markets.
- Looking ahead, the fund has reduced its exposure to credit and illiquid securities to below 10% and increased diversification to more market neutral and arbitrage strategies. Volatility is expected to remain high given continued uncertainty in the markets.
- As of January 2008, the fund's strategy allocation was approximately 22.5% in long/short equity, 46% in market neutral, arbitrage and event driven strategies, and the remainder in multi-strategy, global macro, emerging markets and
The document provides an update on the Equity Income Portfolio strategy for year-end 2008. It discusses how 2008 was an extraordinarily difficult year for financial markets, with most major indexes experiencing declines of 30-40%. While the portfolio fared better than indexes with a decline of 18%, it was still the portfolio's first negative year since inception in 2000. The outlook provided expects a long and difficult economic downturn, with stock market valuations not bottoming until 2015-2020 when price-to-earnings ratios reach single digits. The update reviews the portfolio holdings and dividend payments received in 2008.
The document discusses recent market volatility and the economic outlook. It notes that markets have declined due to ongoing issues with European debt and weakening global growth. While the risk of a US recession has risen, the US is expected to avoid a severe recession as key economic indicators remain above levels seen during the financial crisis. The document advocates for long-term investment strategies and cautions against abandoning equities due to short-term volatility, noting that markets have already priced in a significant drop in corporate earnings.
2007 01 white presentation at barclays capital in florida 28 30 january 2007 ...William White
1) The document summarizes a presentation given by William White about globalization and the convergence of inflation rates. It discusses how inflation has fallen globally and become less volatile. It also explores several potential explanations for these trends, including effective central bank policy, globalization of markets, and the "savings glut" hypothesis.
2) The presentation is divided into four parts. The first discusses the facts about declining inflation and volatility worldwide. The second evaluates alternative explanations for these trends. The third considers prospects for the future and potential financial imbalances. The fourth discusses implications for monetary policy.
3) In conclusion, the presentation argues that no single factor can fully explain recent inflation trends. Rather, a combination of forces, including global
2012 Economic and Stock Market Outlook - Dec. 2011RobertWBaird
Risk on S&P 500 to 1000, reward to 1400. Election and European debt uncertainties are dominant risks in first half. Headwinds could abate later in year. GDP outlook limited to 2% growth due to lack of income gains. Europe in recession. Volatility unlikely to decrease; manage portfolios for risk and return.
1. While some economists believe the recession may be ending in the US, many in the commercial real estate industry remain wary that the downturn is not over and a "knockout punch" could still come.
2. Comments from real estate executives indicate that commercial real estate will not recover until banks start lending again and problems from bad debt, lack of credit, weak employment, and falling property values are addressed.
3. The recession may have delivered its worst blows but commercial real estate still has more difficulties ahead as long as troubled assets remain on bank balance sheets without proper resolution.
The document discusses India's economic growth and whether it could experience a bubble and crisis similar to Japan in the 1980s-90s. It notes that India's stock market has grown strongly but questions if this is a bubble close to bursting. It analyzes India's stock market performance and P/E ratios, finding the market fell after two years when P/E ratios exceeded 20. This raises concerns current high P/E ratios could lead to a crash. It also notes India's industrial output has recently slumped, posing another threat to economic growth. The document questions if India is on the verge of an economic bubble bursting.
In RiskMonitor, Allianz Global Investors (AllianzGI) together with Investment & Pensions Europe (IPE) magazine surveys European institutional investors’ perceptions of capital market, regulatory and governance risk.
Ireland, PIGS, QE2, the euro and the melting potMarkets Beyond
The document discusses the ongoing eurozone debt crisis, quantitative easing policies, and asset bubbles. It argues that central banks' use of quantitative easing has led to repeated boom and bust cycles by inflating asset bubbles that eventually pop. The Fed is stimulating markets but not the real economy. Government fiscal policy should directly create jobs, not rely on indirect "wealth effects" from rising stock prices. Preventing asset bubbles from forming is preferable to dealing with the aftermath of their bursting.
The document summarizes William Larkin Jr.'s presentation at an investment conference on analyzing the current bond market situation. Some key points made include:
1) Interest rates have fallen to historically low levels as the Fed pursues policies of financial repression to stimulate the economy. However, low rates may be creating a bond bubble.
2) The current macroeconomic environment is unique, with interconnected financial systems and the need for rapid changes to policies around issues like the national debt.
3) Bond strategies can no longer rely solely on buy-and-hold or passive indexing given low yields and risks if rates rise. Diversification across bond types and active management are needed.
4) Liquidity is
The document discusses the growing threat of cyberattacks and why they could cause a global crisis. It notes that over 30 countries have implemented cybersecurity strategies in response. However, the threat is outpacing these initiatives as organizations become more dependent on digital technologies and data. The risks are particularly concerning for critical infrastructure industries like energy, banking, and manufacturing. Companies have significantly increased their cyber insurance coverage in response, with healthcare firms buying 178% more coverage and utilities 98% more on average since 2012. The document concludes that greater data dependence and potential impacts of breaches mean cyberattacks remain one of the top risks for causing a global crisis.
This document provides an executive summary of a report analyzing investment prospects for 2013-2015 using a long wave framework. The framework, based on Kondratieff Cycles, is shunned by the mainstream but has advantages in identifying asset allocation opportunities over time. The analysis suggests central banks are creating a new bubble in money that will lead to an inflationary crisis and transition to a new monetary system. Strategically, the report favors equities over bonds, with tactical volatility expected until an inflationary endgame unfolds.
1. Investor mood and risk appetite fluctuates between periods of euphoria and despair, similar to the risk on/off concept. The document's proprietary Risk Aversion Index tracks these shifts in investor sentiment.
2. The RAI typically resides within defined zones of risk tolerance over intermediate periods - a risk loving zone where investors accept more risk, a neutral zone with a balanced approach, and a risk allergic zone where fear and gloom dominate.
3. Asset class returns vary significantly depending on the prevailing risk zone. Riskier assets tend to perform best in risk loving periods, while safer fixed income outperforms in risk allergic times. A balanced portfolio generally fares best in the neutral zone.
The document discusses the efforts of the ECB and Fed to address inflation and deflation in the Eurozone. It notes that while the ECB has signaled a willingness to purchase Spanish and Italian bonds, there is uncertainty around whether this will actually occur due to German opposition. High debt levels across many Eurozone countries, including government, corporate, and household debt exceeding 180% of GDP in most cases, have increased the risk of deflation. Local measures may be needed to restructure public and private debt, as increased centralization and austerity alone will not solve the crisis.
The global economy is slowing in 2012, with growth expected to be slower than 2011 in many leading markets. In Europe, governments are cutting spending and raising taxes to address fiscal issues, weakening economies and undermining confidence. While recent actions have stabilized the situation temporarily, the long-term future of the Eurozone remains uncertain and could involve either greater integration or failure of the currency union. Consumer products companies may find opportunities in slower commodity prices and inflation in some markets.
The document discusses the threat of economic stagnation in Western countries and the challenges of austerity. It argues that while austerity measures may seem moderate from a regional perspective, they have profoundly negative effects on individual crisis-struck countries. Stimulus packages implemented in response to the financial crisis should have been combined with structural reforms. Different types of recessions require different policy responses - balance sheet recessions like in the US need continued fiscal support, while Southern European crises stem more from structural issues and require fiscal consolidation paired with reforms.
The document discusses highlights for 2012 including:
1) An upward bias for stocks in the range of 1,100 to 1,550 and low bias for interest rates in the first half of 2012, though headwinds and uncertainty may arise quickly.
2) 2012 will be a significant time of historical transformations as pressures build from unresolved issues like high global debt and political unrest, similar to the 1970s-1980s.
3) TSWM will maintain a well-thought-out asset allocation plan and conservative balance to mitigate emotional decision-making as volatility increases, relying on sound portfolio principles.
This newsletter discusses stocks as a long-term investment option despite market volatility. While 2011 saw fear in the markets similar to 2008, stocks have historically provided higher real returns than other assets over periods of 20 years or more. Specifically, stocks have returned an average of 6.7% annually after taxes compared to just 2.8% for bonds and 1.7% for treasury bills from 1871-2006. Currently, dividend-paying stocks appear reasonably valued relative to low interest rates and offer higher yields than GICs. The newsletter recommends owning dividend stocks as a way to earn income and hedge against inflation over the long run.
Viewpoint Newsletter from Clear View Wealth Advisors with a focus on the role of dividend-paying stocks and the inflation-deflation debate. Also includes links to the free financial roadmap tool.
The document discusses the performance of financial markets in 2012, noting that:
1) The U.S. stock market gained 16% in 2012 despite fears over issues like the European debt crisis and slow growth in China.
2) Bond yields fell unexpectedly in the U.S. and Europe continued to "muddle through" its debt crisis, with many European markets outperforming the U.S.
3) A report card on economic and market indicators shows improvements from 2010-2012, with corporate earnings and housing showing signs of recovery though inflation remained low.
- The Alchemy Capital Management investment fund suffered losses in the fourth quarter of 2007 from hedge fund failures and the effects of the credit crunch. Approximately 40% of the fund's allocation was directly or indirectly linked to credit markets.
- Looking ahead, the fund has reduced its exposure to credit and illiquid securities to below 10% and increased diversification to more market neutral and arbitrage strategies. Volatility is expected to remain high given continued uncertainty in the markets.
- As of January 2008, the fund's strategy allocation was approximately 22.5% in long/short equity, 46% in market neutral, arbitrage and event driven strategies, and the remainder in multi-strategy, global macro, emerging markets and
The document provides an update on the Equity Income Portfolio strategy for year-end 2008. It discusses how 2008 was an extraordinarily difficult year for financial markets, with most major indexes experiencing declines of 30-40%. While the portfolio fared better than indexes with a decline of 18%, it was still the portfolio's first negative year since inception in 2000. The outlook provided expects a long and difficult economic downturn, with stock market valuations not bottoming until 2015-2020 when price-to-earnings ratios reach single digits. The update reviews the portfolio holdings and dividend payments received in 2008.
The document discusses recent market volatility and the economic outlook. It notes that markets have declined due to ongoing issues with European debt and weakening global growth. While the risk of a US recession has risen, the US is expected to avoid a severe recession as key economic indicators remain above levels seen during the financial crisis. The document advocates for long-term investment strategies and cautions against abandoning equities due to short-term volatility, noting that markets have already priced in a significant drop in corporate earnings.
2007 01 white presentation at barclays capital in florida 28 30 january 2007 ...William White
1) The document summarizes a presentation given by William White about globalization and the convergence of inflation rates. It discusses how inflation has fallen globally and become less volatile. It also explores several potential explanations for these trends, including effective central bank policy, globalization of markets, and the "savings glut" hypothesis.
2) The presentation is divided into four parts. The first discusses the facts about declining inflation and volatility worldwide. The second evaluates alternative explanations for these trends. The third considers prospects for the future and potential financial imbalances. The fourth discusses implications for monetary policy.
3) In conclusion, the presentation argues that no single factor can fully explain recent inflation trends. Rather, a combination of forces, including global
2012 Economic and Stock Market Outlook - Dec. 2011RobertWBaird
Risk on S&P 500 to 1000, reward to 1400. Election and European debt uncertainties are dominant risks in first half. Headwinds could abate later in year. GDP outlook limited to 2% growth due to lack of income gains. Europe in recession. Volatility unlikely to decrease; manage portfolios for risk and return.
1. While some economists believe the recession may be ending in the US, many in the commercial real estate industry remain wary that the downturn is not over and a "knockout punch" could still come.
2. Comments from real estate executives indicate that commercial real estate will not recover until banks start lending again and problems from bad debt, lack of credit, weak employment, and falling property values are addressed.
3. The recession may have delivered its worst blows but commercial real estate still has more difficulties ahead as long as troubled assets remain on bank balance sheets without proper resolution.
The document discusses India's economic growth and whether it could experience a bubble and crisis similar to Japan in the 1980s-90s. It notes that India's stock market has grown strongly but questions if this is a bubble close to bursting. It analyzes India's stock market performance and P/E ratios, finding the market fell after two years when P/E ratios exceeded 20. This raises concerns current high P/E ratios could lead to a crash. It also notes India's industrial output has recently slumped, posing another threat to economic growth. The document questions if India is on the verge of an economic bubble bursting.
In RiskMonitor, Allianz Global Investors (AllianzGI) together with Investment & Pensions Europe (IPE) magazine surveys European institutional investors’ perceptions of capital market, regulatory and governance risk.
Ireland, PIGS, QE2, the euro and the melting potMarkets Beyond
The document discusses the ongoing eurozone debt crisis, quantitative easing policies, and asset bubbles. It argues that central banks' use of quantitative easing has led to repeated boom and bust cycles by inflating asset bubbles that eventually pop. The Fed is stimulating markets but not the real economy. Government fiscal policy should directly create jobs, not rely on indirect "wealth effects" from rising stock prices. Preventing asset bubbles from forming is preferable to dealing with the aftermath of their bursting.
The document summarizes William Larkin Jr.'s presentation at an investment conference on analyzing the current bond market situation. Some key points made include:
1) Interest rates have fallen to historically low levels as the Fed pursues policies of financial repression to stimulate the economy. However, low rates may be creating a bond bubble.
2) The current macroeconomic environment is unique, with interconnected financial systems and the need for rapid changes to policies around issues like the national debt.
3) Bond strategies can no longer rely solely on buy-and-hold or passive indexing given low yields and risks if rates rise. Diversification across bond types and active management are needed.
4) Liquidity is
The document discusses the growing threat of cyberattacks and why they could cause a global crisis. It notes that over 30 countries have implemented cybersecurity strategies in response. However, the threat is outpacing these initiatives as organizations become more dependent on digital technologies and data. The risks are particularly concerning for critical infrastructure industries like energy, banking, and manufacturing. Companies have significantly increased their cyber insurance coverage in response, with healthcare firms buying 178% more coverage and utilities 98% more on average since 2012. The document concludes that greater data dependence and potential impacts of breaches mean cyberattacks remain one of the top risks for causing a global crisis.
This document provides an executive summary of a report analyzing investment prospects for 2013-2015 using a long wave framework. The framework, based on Kondratieff Cycles, is shunned by the mainstream but has advantages in identifying asset allocation opportunities over time. The analysis suggests central banks are creating a new bubble in money that will lead to an inflationary crisis and transition to a new monetary system. Strategically, the report favors equities over bonds, with tactical volatility expected until an inflationary endgame unfolds.
1. Investor mood and risk appetite fluctuates between periods of euphoria and despair, similar to the risk on/off concept. The document's proprietary Risk Aversion Index tracks these shifts in investor sentiment.
2. The RAI typically resides within defined zones of risk tolerance over intermediate periods - a risk loving zone where investors accept more risk, a neutral zone with a balanced approach, and a risk allergic zone where fear and gloom dominate.
3. Asset class returns vary significantly depending on the prevailing risk zone. Riskier assets tend to perform best in risk loving periods, while safer fixed income outperforms in risk allergic times. A balanced portfolio generally fares best in the neutral zone.
The document discusses the efforts of the ECB and Fed to address inflation and deflation in the Eurozone. It notes that while the ECB has signaled a willingness to purchase Spanish and Italian bonds, there is uncertainty around whether this will actually occur due to German opposition. High debt levels across many Eurozone countries, including government, corporate, and household debt exceeding 180% of GDP in most cases, have increased the risk of deflation. Local measures may be needed to restructure public and private debt, as increased centralization and austerity alone will not solve the crisis.
The global economy is slowing in 2012, with growth expected to be slower than 2011 in many leading markets. In Europe, governments are cutting spending and raising taxes to address fiscal issues, weakening economies and undermining confidence. While recent actions have stabilized the situation temporarily, the long-term future of the Eurozone remains uncertain and could involve either greater integration or failure of the currency union. Consumer products companies may find opportunities in slower commodity prices and inflation in some markets.
To
help senior executives weather this economic storm, the Economist Intelligence Unit has updated its
answers to some of the questions most frequently asked by clients, following the publication of the
four previous editions of Global crisis monitor. In answering each question, we outline our current
forecast, explain our thinking, and highlight any key risks or alternative scenarios.
“Ironically, if central bank ‘financial repression’ continues to work and increases
economic growth, we will likely see markedly higher bond yields by year-end
following intervention by the Fed to rein in stimulus as unemployment falls.“
The document summarizes economic concerns from a single day in May 2012. It discusses Greece potentially leaving the eurozone and going into economic collapse. It also mentions the weakening European economy, troubles in the European commercial real estate market, and issues with J.P. Morgan that were hurting market sentiment. However, the document expresses that diversification may help investors weather volatility and that the outlook is better than 2008-2009 despite some challenges still existing.
The document discusses several economic and political issues:
1) European authorities have struggled to effectively address the escalating sovereign debt crisis, providing only temporary solutions while the problems get worse.
2) The US debt level has risen significantly due to tax cuts, spending increases, and the financial crisis, reaching nearly 100% of GDP.
3) Emerging markets saw large declines as investors fled to safe havens like US treasuries, though some emerging countries remain attractive long-term investments due to growth and demographics.
4) South Africa faces economic challenges including slowing growth compared to other emerging markets, while political risks also loom over policy and foreign investment.
Vgis macro the pigs and the emu lost decadeFahd Rachidy
The document discusses the sovereign debt crisis in Greece and its potential impact on the European Monetary Union (EMU). It notes that Greece is facing severe budget deficits and debt levels that threaten its long-term fiscal stability. There is a risk that the crisis could spread to other weaker Eurozone economies like Portugal, Spain, and Italy. Immediate intervention is needed to prevent Greece's problems from worsening and sparking a wider crisis across Europe. However, options are limited given rules prohibiting bailouts between Eurozone members. In the longer run, the crisis has revealed structural weaknesses in the EMU and calls its sustainability into question.
This document discusses several common market indicators that can be monitored to understand how sentiment about the European debt crisis may be evolving. It identifies interest rates on sovereign debt, credit default swap costs, levels of borrowing from the European Central Bank, and credit rating changes as some of the most important factors that can reflect or affect market reactions to news from Europe. It also notes that investor responses do not always match what might be expected and that there are many interrelated pieces to the ongoing situation.
1) The document discusses the clash between short-term and long-term solutions to the euro area crisis. While urgent action is needed to reduce borrowing costs in Italy and Spain, without long-term reforms like fiscal and banking unions, Germany's willingness to provide funds may decline and the risk of a euro breakup will rise.
2) The euro area crisis stems from economic divergence pre-euro and an institutional deficit without a common fiscal policy. Crisis countries benefited from low rates but did not reform, while northern Europe performed better. The ECB cannot directly intervene due to treaty limits.
3) Deeper integration like banking stress tests and allowing the ECB to directly buy sovereign debt are urgently needed to
Fasanara Capital | Weekly Investment Outlook | December 17th 2011Fasanara Capital ltd
The document provides an investment outlook and analysis of the European sovereign debt crisis and financial markets. It discusses the failure of recent ECB actions to restore confidence, predicts a confidence collapse scenario. It examines debt flows and stock levels facing European countries in 2012, risks to bank deposits and consumer spending. It argues that Germany will be left alone to handle the crisis but faces opposition from struggling countries and its own economic problems, making large-scale solutions difficult to achieve.
The document provides an investment outlook from Fasanara Capital. It argues that markets remain in a fragile state with multiple potential outcomes, including inflation, defaults, or stagnation. Due to widespread risks, the base case scenario for 2012 is a stagnant market environment with volatile trading and potential shocks. Given embedded risks, current valuations do not adequately compensate investors. The outlook advocates maintaining short positions and hedges to manage fat tail risks in these dysfunctional markets.
The document provides an investment outlook from Fasanara Capital. It expects the ECB and Germany to find a short-term solution to avoid a disorderly Greek default, despite remaining bearish long-term. It anticipates using massive ECB liquidity to hedge against negative scenarios through selective shorts and hedging programs. Opportunities also exist in industries vulnerable to banking retrenchment and slowing Chinese imports.
Western governments are hopelessly addicted to deficit financing while refusing to address looming funding issues - with apologies to the embarrassingly foolish Angela Merkel, politicians can no more successfully “battle” the markets than you and I can successfully “battle” gravity. Petrocapita is an investment trust built around the premise that demand for energy will continue to move prices higher over the long-term. Petrocapita was created to allow investors to add professionally managed oil & gas assets directly to their portfolios.
The document summarizes several design failures in the Eurozone that contributed to economic instability. It discusses how (1) booms and busts continued to occur at the national level without coordination at the union level, which the monetary union likely exacerbated, and (2) stabilizing mechanisms that existed at national levels were removed without being implemented at the union level, leaving member states vulnerable. Specifically, there was no lender of last resort for governments, exposing government bond markets to self-fulfilling liquidity crises. This caused austerity and recessions while increasing debt loads in troubled countries.
1) The document discusses upcoming changes to Canada's Old Age Security (OAS) program to ensure its sustainability as Canadians live longer. It proposes gradually increasing the eligibility age from 65 to 67 between 2023 and 2029.
2) Europe continues working to resolve its debt crisis but problems remain, particularly in Spain. While Greece obtained recent financing, it will likely need further bailouts and may leave the EU. The US and Canada will see slow growth aided by low rates and recovering demand.
3) Financial markets will continue experiencing volatility driven by psychology rather than fundamentals. Investors remain fearful after the 2008 crash. Longer term, corporate earnings, dividends and valuations will impact markets positively despite near term
1) The document discusses upcoming changes to Canada's Old Age Security (OAS) program to make it sustainable long-term as life expectancies rise. It proposes gradually increasing the eligibility age from 65 to 67 between 2023 and 2029.
2) Europe continues working to resolve its debt crisis but problems remain, particularly in Spain. While Greece obtained recent financing, it will likely need further bailouts and may eventually leave the EU.
3) The US and Canada will see slow growth aided by low rates and recovering demand, but politics and debt issues could slow progress. Markets will remain volatile driven more by psychology than fundamentals.
1) The Greek debt crisis began in 2010 when it was revealed that the Greek government had been misrepresenting economic statistics and running large budget deficits, with debt over 120% of GDP.
2) As the crisis spread to other European countries like Spain and Portugal, it became clear they lacked the ability to repay debts due to low growth and foreign investment.
3) Austerity measures were proposed for Greece in 2010 but the situation became more dire, signaling a harsh debt crisis across Europe.
1) China's economic growth is slowing considerably, with the risk of a "hard landing" increased. GDP growth is projected to be just below 8% this year with moderate stimulus to counter the slowdown.
2) A hard landing in China's economy could have significant negative effects on the global economy as China accounts for around 50% of global growth. It would also impact financial, commodity, and trade markets.
3) Slower growth in China would negatively affect exporting countries and commodity prices, with countries like Germany, Japan, Sweden, the US, Australia, Indonesia, and Brazil feeling the effects. It could also cause turbulence in global financial markets.
The Global Economy No. 8 - November 30, 2011Swedbank
The document summarizes the state of the global economy, with a focus on challenges in the eurozone. It discusses:
1) How the eurozone debt crisis is spreading from southern Europe to core countries, threatening the stability of the currency union.
2) How the inability to resolve fiscal problems in the US and eurozone crisis could lead to a global economic slowdown or recession.
3) The rising risk of recession in the eurozone as fiscal austerity, credit constraints, and declining business/consumer confidence hurt growth prospects.
The document provides a weekly summary of key economic indicators and financial market performance in India for the period of 1st-8th June 2018. Some of the key highlights included:
- The Indian equity market ended the week flat with the Sensex gaining 0.61% supported by expectations of a normal monsoon, rupee strengthening, and falling crude prices.
- Bond yields rose as RBI raised repo and reverse repo rates by 25 bps while maintaining a neutral liquidity stance, suggesting this may be the only rate hike this fiscal year.
- FII investments were positive at Rs. 1,164 crore while DII investments were higher at Rs. 2,470 crore for the week.
- The Indian equity market rose slightly over the week, aided by falling crude oil prices and recovery in the rupee. Volatility increased due to political issues in Italy and trade war fears. Telecom and oil & gas sectors saw gains while infrastructure, realty, and pharma declined.
- The 10-year Indian government bond yield increased sharply by 11 basis points to 7.84% due to higher than expected GDP growth and inflation numbers.
- Key economic indicators included 7.7% GDP growth in Q4, 4.58% CPI inflation in April, and 12.65% growth in credit in May. The RBI's monetary policy meeting on June 6th is expected to take a h
- The key Indian equity indices Sensex closed the week with marginal gains of 0.5% despite volatility in the market from events like US Fed rate hikes and the de-nuclearization of North Korea. Pharma stocks gained the most while metals and oil & gas dragged.
- Yields on the 10-year Indian government bond eased initially but rose later in the week due to higher inflation numbers. The RBI kept policy rates unchanged.
- Internationally, the US Federal Reserve raised interest rates as expected while China's industrial production growth slowed slightly. The Trump-Kim summit led to agreements on denuclearization.
The document provides an outlook on global debt markets in November 2016. It notes that global bond yields are rising rapidly as central banks move away from easy monetary policies. The US 10-year Treasury yield rose to a 5-month high near 1.87% on expectations of a December rate hike by the US Federal Reserve. German and UK bond yields also increased. Global bond markets experienced a significant selloff due to expectations of higher US rates and uncertainty around the ECB's bond purchase program.
The document provides an overview and outlook across various asset classes and sectors in India and globally. Some key points:
- Domestic equity markets have seen modest gains of around 8.5% year-to-date despite recent volatility due to political tensions. Bond yields have fallen in India on expectations of further rate cuts.
- Global central banks like the Fed and ECB appear less accommodative but the US economy remains resilient. Growth has slowed in Japan and parts of Europe.
- Automobiles, banks, FMCG and infrastructure sectors are expected to perform well in India, while cement may see a recovery. Select domestic sectors and stocks still appear attractive relative to other emerging markets.
- The document provides an economic and market summary for the week of November 14-18, 2016. It discusses developments in global markets, the Indian economy and stock market, and provides commentary on sectors and asset classes.
- Key points include the expectation of US Federal rate hikes in December, the impact of India's demonetization on various industries, and an outlook that Indian stock markets will see further declines in the short-term but provide buying opportunities. Debt markets are also seen as favorable due to expected interest rate cuts.
The document provides an analysis of recent events affecting global markets. It discusses two major events: 1) US presidential elections resulting in a victory for Donald Trump and 2) India's demonetization of Rs. 500 and Rs. 1000 currency notes. It summarizes the short-term negative impacts these events will have on certain sectors in India as well as longer-term positive impacts expected, especially in banking, infrastructure, and rate-sensitive sectors. Market indices are expected to remain cautious in the near-term but the analysis maintains a long-term bullish outlook for Indian markets.
The document summarizes recent news and developments in global markets and the Indian economy from October 31 - November 4, 2016. It discusses the impact of the FBI announcement regarding Hillary Clinton's emails on US and global markets. It also covers the upcoming US presidential election and its potential effects. Domestically, it discusses recent inflation data, bank earnings, and the progress of GST implementation in India. Globally, it mentions recent economic data and central bank decisions in the US, UK, Eurozone, and China.
The document provides an equity market outlook and analysis for the period of Diwali to Diwali (October 2016 to October 2017). It notes that large caps underperformed with returns of 5-6% last year while midcaps saw stronger returns of 19-20%. For the current year, it expects lower double digit returns for large caps and 15-20% returns for mid and small caps. It recommends focusing on sectors with good private demand like financials, automobiles, and consumer durables. Large caps are seen as providing stability but lower returns compared to midcaps where returns of 15% are expected over the next year for those with a higher risk appetite and 2-3 year investment horizon.
- Markets have shown a flattish trend for the past few weeks due to mixed global news and lack of interesting domestic news. Quarterly earnings will be a key focus.
- The US Fed minutes showed many members supported a rate hike while others wanted rates kept steady. Globally, some nations want softer rates while developed nations prefer harder rates.
- In India, quarterly earnings just began and will be important, with IT companies continuing to disappoint so far. Regional cement players may report better numbers than large caps with nationwide reach. Private banks are expected to report strong results.
- Last week, global equity markets declined sharply due to one bad trading day that rattled investors who had become complacent about continuously rising prices. However, market corrections of 6-8% are normal and investors should focus on investing in good quality stocks during declines rather than withdrawing.
- Concerns remain about instability in Europe's banking system, uncertainty around US interest rates after the election, and potential for Chinese currency devaluation. Wholesale inflation slowed in India while the government may increase public spending to spur growth.
- Key stock indices declined over the past week with the Sensex falling 1.46% while most sectors also ended lower with metals and power dropping the most.
- The monetary policy committee unanimously agreed to cut interest rates by 0.25 basis points, though some banks have passed on lower rates between 0.10-0.15%. Rate cuts are hoped to boost consumption.
- Early indicators show strong consumer durable and auto sales during the Ganpati and upcoming festivals, suggesting good consumption for the next few months.
- Earnings growth of 17-18% is expected this fiscal year, with most growth occurring in the third and fourth quarters.
- Upcoming global events like the US elections and potential interest rate hikes could increase volatility.
The document provides an overview of global and domestic markets and economic indicators for the week of September 5-9, 2016. Key points include:
- There was a global market correction on Friday due to falling bond prices, though this does not necessarily mean the dislocation in markets has been corrected.
- Indian consumer inflation is expected to have eased in August but may still be too high for an interest rate cut in September. Tax receipts rose robustly in August.
- Economic data from major economies like Germany, the US, and China suggests slowing growth, while long-term debt issuance in Europe may increase risks.
- Indian indices fell for the week while commodities like crude oil rose and the rupee
The document provides a weekly summary of domestic and global economic news from August 29th to September 2nd, 2016.
Domestically, Indian factory activity expanded at its fastest pace since mid-2015 in August. However, India's annual economic growth slowed to 7.1% in the second quarter, below expectations. Globally, British manufacturing rebounded in August after Brexit. US job growth slowed in August, likely putting off a Federal Reserve rate hike. China and the US committed to refrain from competitive currency devaluations. Major stock indices rose around 1-3% over the week.
This document provides an overview and outlook across various sectors in India and globally. It discusses domestic and global economic factors, equity and debt market performance, sector-specific views, and other relevant topics. Key points include a positive outlook for domestic consumption sectors due to the festive season, signs of recovery in the Indian manufacturing sector, and expectations that global central banks will continue accommodative monetary policies.
- The equity markets in India traded in a narrow range over the past week and are expected to remain range-bound in the coming weeks. Key economic data like GDP and core sector growth were in line with expectations.
- In the US, recent data points to continued moderate economic growth and makes the case for an interest rate hike in September. The impact of rate hikes is expected to be greater on developed markets than emerging markets like India.
- Macroeconomic indicators from China suggested efforts to reduce corporate financing costs and tax burdens to boost the economy, while the central bank took measures to inject liquidity into markets.
This document provides a weekly summary of economic, market, and other news from August 16-19, 2016. Some key points:
- India's CPI inflation rose above 6% in July, exceeding the central bank's tolerance limit and raising expectations of further rate hikes.
- Global government bond yields increased modestly, with the US 10-year yield rising to 1.6%, while oil prices fell on doubts that upcoming producer talks would reduce oversupply.
- Domestically, strong monsoon rains are expected to boost agricultural growth and the overall economy. Internationally, China's exports declined in 2016 and are projected to fall further due to economic pressures.
This document provides a weekly summary of global and domestic economic news and market performance for the week of August 8-12, 2016. Some key points:
- India's wholesale and consumer price inflation increased in July driven by higher food prices. Industrial production growth slowed in the Eurozone and China.
- US retail sales were flat in July and the budget deficit declined, while China's economic growth slowed with the weakest investment growth in over 15 years.
- The Indian stock market ended the week slightly lower, with the Sensex falling 0.11%. Most sectoral indices also declined over the week except for banking. Commodity prices were mixed with gold falling slightly while crude oil rose.
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...Donc Test
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting, 8th Canadian Edition by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Ebook Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Pdf Solution Manual For Financial Accounting 8th Canadian Edition Pdf Download Stuvia Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Financial Accounting 8th Canadian Edition Ebook Download Stuvia Financial Accounting 8th Canadian Edition Pdf Financial Accounting 8th Canadian Edition Pdf Download Stuvia
The Rise of Generative AI in Finance: Reshaping the Industry with Synthetic DataChampak Jhagmag
In this presentation, we will explore the rise of generative AI in finance and its potential to reshape the industry. We will discuss how generative AI can be used to develop new products, combat fraud, and revolutionize risk management. Finally, we will address some of the ethical considerations and challenges associated with this powerful technology.
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
5 Tips for Creating Standard Financial ReportsEasyReports
Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
2. Contents
Index Page No.
Economic Update 4
Equity Outlook 8
Debt Outlook 11
Forex 13
Commodities 14
Real Estate 15
2
3. From the Desk of the CIO…
Dear Investor,
There seems to be a certain politico-economic brinkmanship that
Germany and rest of the Eurozone countries seem to be engaged
The million dollar (more like Trillion Euro!) question everyone seems to
in. This is precisely what makes us worry about the future of Euro
be asking is “will the Euro survive?” We believe that Euro’s survival has
– and there is that small chance that the Germans may push their
become less certain than it was a month ago. Most of this is owing to
fiscal prudence plans a little too far. This is what might cause the
the absence of a Fed-like response in Euro-zone to the present crisis.
break-up of the Euro.
This goes back to the deep-rooted ideological differences amongst the
Anglo-Saxon economies and Germany. While the former believe in the
The Indian domestic market sentiment has been less than
efficacy of monetary policy in managing the fallouts of crises, the latter
cheerful due to the political logjam over retail FDI. The volte-face
insists on fiscal prudence as the primary solution to the present crisis.
by the opposition on their stance about retail FDI reminds us of
Hence the western economists and leaders are busy cooking up one
the age-old tendency within Indian politics for the opposition to
idea after another of how Eurozone can go about fighting the crisis
oppose everything nearly blindly. How the government deals with
with monetary policy tools – including Eurobonds, ECB’s Euro-printing
this set-back and how much of its new-found resolve to continue
and mutualization of sovereign debt within Eurozone. German
with reforms survives this bickering is what will drive the
government on the other hand is skeptical of fighting debt problems
macroeconomic momentum in next couple of quarters. We
with more debt as well as continuing with “financialization” which
expect a muddle-through scenario to continue for the next few
started most of the trouble in the first place. Apparently frustrated
months.
with Germany’s resolve to avoid printing of Euro by ECB, the group of 6
central banks went ahead and offered low cost dollar credit lines to
Inflation has fortunately remained out of the limelight – with the
European banks. This did prop up equity markets globally towards the
RBI governor explicitly predicting a fall in inflation by the end of
end of November – also fuelling speculation that the end might be in
FY12. We have now become cautiously positive on long term
sight for the debt crisis in Euro-zone.
debt. In the next 2-3 year horizon it would be a good idea to bet
on interest rates to fall – this is best done through zero coupon
Some think that having the house on fire is a wrong time to be arguing
long term quasi-sovereign bonds like NABARD and REC. The
about repairing of the fire engine. Others suggest that the most
expected returns can range between 8-10% p.a. if interest rates
important reforms happen typically during times of crisis (remember
do not fall and 15%-20% p.a. if they do fall by 1%-2% over next 2-
1991 in India!)
3 years.
“Advisory services are provided through Karvy Stock Broking Ltd. (PMS) having SEBI Registration No: INP000001512. Investments are subject to market risks. Please read the disclaimer on slide no.18”
3
5. Economy Update - Global
• The Conference Board Consumer Confidence Index, rose to 56.0 in November up from 40.9
in October signalling that consumers' apprehension regarding the short-term outlook for
US business conditions, jobs and income prospects has eased considerably.
• Unemployment rate has fallen to 8.6% for the month of November from 9.0% in October .
• The final Markit Eurozone Manufacturing PMI fell to 46.4 in November, from 47.1 in
October, its lowest level since July 2009 and unchanged from the earlier flash estimate.
The PMI has signalled contraction in each of the past four months.
Europe • Greece's austerity-fuelled recession drove the budget deficit wider in October. The central
government deficit grew by an annual 11 percent to 20.10 billion euros ($27.19 billion) in
the first 10 months of the year
• The seasonally adjusted Markit /JMMA Purchasing Managers’ Index (PMI) posted 49.1 in
November, down from 50.6 in October, signalling a renewed deterioration in
Japan manufacturing sector operating conditions.
• Unemployment rate increased to 4.5% in October from 4.1% in Sept’11.
Emerging • China’s HSBC PMI Index dropped at 47.7 in November from 51.0 in October, signalling a
economies solid deterioration in manufacturing sector performance. Combined with faster than
expected easing in inflation implies that growth is set to overtake inflation.
5
6. Economy Outlook - Domestic
12.0% IIP monthly data • India's economic growth rate slowed down further to 6.9
10.0%
per cent in the second quarter (July-September) of FY12 as
8.0%
compared to 8.9 per cent achieved in the same quarter of
6.0%
the previous financial year. The GDP growth rate for Q1 and
4.0%
Q2 FY11 was revised downwards to 8.1 and 8.4 respectively
2.0%
from the previous estimates of 9.3 and 8.9%.
0.0%
Sep Oct Nov Dec Jan 11 Feb Mar Apr May Jun 11 Jul 11 Aug Sep Oct
10 10 10 10 11 11 11 11 11 11 11 • This was attributed largely to the negative growth in
‘mining and quarrying’ and steep fall in the growth of
• IIP figure declined for the third consecutive month to 1.9 per manufacturing sector, as compared to their levels of
cent in September compared to 4% in the last month. During growth in Q2 of 2010-11.
the April-September period this fiscal, IIP growth stood at 5
per cent-against 8.2 per cent in the same period last year. The • A steady rise in interest rates combined with stubbornly
mining sector saw negative growth at (5.6%) in September’11 high inflation has impacted demand and credit sensitive
as against the 4.3% growth in output in September’10. Capital sectors. The Reserve Bank has also reduced its forecast for
goods registered negative growth at (6.8%) in September’11 real GDP growth from 8 to 7.6 per cent. The uncertainty in
as against the 7.2% growth in September’10. The steep the global markets may also impact the exports and the
decline in the capital goods segment highlights the service sector of the economy hence making the growth
deceleration in the manufacturing sector. target difficult to achieve.
GDP growth
• The Industrial output in September’11 grew at the lowest rate 9.0 8.6 8.4 8.3
8.1
in the last two years, reflecting the slowdown in the country’s 8.0
7.8 7.7
pace of economic growth. In addition to the high interest 6.9
7.0
6.0
rates that has been impacting economic activity, the weak 6.0
global demand too has been stated to be intensifying the 5.0
slowdown in the economy. In addition, persistent high 4.0
inflation, rising input costs widening deficits and the FY10(Q3) FY10(Q4) FY11(Q1) FY11(Q2) FY11(Q3) FY11(Q4) FY12(Q1) FY12(Q2)
weakening currency have been contributing in impeding the
growth in industrial output.
6
7. Economic Outlook - Domestic
Growth in credit & deposits of SCBs
• The Wholesale Price Index was reported at 9.73
30.0% Bank Credit Aggregate Deposits
percent in Oct’2011 vis-à-vis 9.72% in
25.0% September‘11. Food and fuel prices posted
20.0% double-digit growth of 11.06% and 14.79%
15.0% respectively. The manufacturing WPI steadied
10.0% above 7.66 percent from 7.69% last month
5.0%
• With the monetary tightening stance by RBI, we
do expect WPI inflation numbers to moderate
• The credit grew 19.6% on a y-o-y basis while out eventually.
deposits grew at ~18% in October.
• Owing to the successive increase in the cost of
borrowing, a moderation has been seen in the credit 10.0% Wholesale Price Index
growth and the current estimate for the Fiscal is ~
9.5%
17-19%.
9.0%
• On account of the slowing growth in the economy 8.5%
and the expected decrease in inflation by December, 8.0%
it is expected that the RBI will pause any interest 7.5%
rate hikes.
* End of period figures
7
8. Equity Outlook
The month of November saw a sharp fall of ten percent in Indian equity markets. There was significant amount of volatility on the
back of fresh concerns about the fiscal health of Euro area countries. FIIs sold almost a billion dollars worth of their holdings. Rupee
weakened sharply against the dollar which added to the nervousness.
In Europe, sentiment turned for the worse after the German bond auction received a poor response. There were concerns that the
financial health of peripheral euro area countries has started affecting even the core of Germany and France. The French bond yields
have continued to spike and the spread between French and German yields in now close to 2%. There is an increasing amount of talk
about French rating being downgraded. The five and ten year Italian bond yields have spiked up and remained above 7%. Italy is
facing an enormous amount to pressure to cut its deficit and saw a new government being sworn in. However, investors continue to
wait for a definitive move towards the euro bonds barring which volatility in Europe might continue for an elongated period of time.
Final number for third quarter GDP data in US came in at 2%, below the earlier estimated 2.5%. Macro-economic indicators in US
continue to be positive and have eased concerns about US economy moving towards a double-dip recession. US consumer demand
has been holding up so far and the Black Friday retail sales numbers where quite impressive. The ISM manufacturing index for
November came in at 52.7 which shows robust growth. As of now, there are no indicators of any recessionary trend in US economy.
The second quarter GDP growth rate in India came in at 6.9%, lowest in nine quarters. This number has confirmed a significant
slowdown in manufacturing and industrial activity in the country. We expect the growth to weaken further in next quarter. RBI has
effectively hiked rates by 500 bps in last sixteen months and that is showing in the growth numbers. We believe that RBI would refrain
from any further tightening and weak growth numbers would force RBI to start the easing cycle earlier than expected. Considering a
very tight liquidity scenario, a CRR cut is a distinct possibility.
The rupee continued its slide to 52.5 before RBI invented to provide some stability. Rupee has been one of the worst performing
Asian currency due to high current account deficit that the country is running. We believe that the current rupee levels provide a very
exciting entry opportunity in equity markets for dollar investors. The last set of second quarter earnings were disappointing. Rupee
depreciation has also resulted in forex losses. Several companies have seen a huge hit to bottom lines due to high interest rates and
commodity prices. We expect the softness in earnings to remain for at least one more quarter. However, Markets have already
discounted a lot of potential negatives and further correction in stock prices might be limited.
While interest rate and inflation cycle might turn for the positive in next few months, Global cues will play an important role in
deciding the market direction in the short term.
8
9. Sector View
Sector Stance Remarks
We believe in the large sized opportunity presented by Pharma sector in India. India’s strength in generics is
difficult to replicate due to quality and quantity of available skilled manpower. With the developed world
keen to cut healthcare costs, and a vast pipeline of drugs going off-patent, Indian pharma players are at the
Healthcare Overweight
cusp of rapid growth. We would bet on the opportunity in Generics and CRAMS space
We prefer “discretionary consumption” beneficiaries such as Cigarettes and branded garments, as the growth
in this segment will be disproportionately higher vis-à-vis the increase in disposable incomes.
FMCG Overweight
Financial sector is undeniably the lubricant for economic growth. Whether the growth comes from
consumption or investments, credit growth is inevitable. Being a well regulated sector, BFSI in India has good
BFSI Neutral asset quality and capital adequacy ratios. Despite the increasing in interest rates, we believe banks will be
able to pass on higher cost of funds to clients as demand remains strong
Demand outlook remains robust with strong earnings growth. Raw material prices have started coming
Automobiles Neutral down which would boost margins. We are more bullish on two-wheeler and agricultural vehicles segment
due to lesser competition and higher pricing power.
The regulatory hurdles, competitive pressures and leverage prevent any return to high profitability levels in
the short to medium term. However, incumbents have started to increase tariffs slowly and we believe that
Telecom Neutral consolidation will happen sooner than expected.
9
10. Sector View
Sector Stance Remarks
Commodity prices have corrected significantly over the last few months due to concerns about growth in
Metals Neutral developed parts of the world. We believe the commodity prices will bounce back once growth recovers
and hence would be positive on industrial metals space.
We like the regulated return charteristci of this space. This space provides steady growth in earnings and
Power Utilities Neutral decent return on capital.
IT space might come under pressure due to continued concerns about growth in developed parts of the
IT/ITES Underweight world. While US and European customers of Indian IT companies are in good health, Order inflows might
slow down in near term
We would stay away from oil PSUs, due to issues of cross subsidization distorting the underlying
Energy Underweight economics of oil exploration and refinery businesses.
Cement demand will certainly grow over the next three years. But the issue is on the supply side. We do
Cement Underweight see an oversupply situation for the next 3-4 quarters.
The USD 1 trillion Infra opportunity is hard to ignore. However, The significant slowdown in order inflow
activity combined with high interest rates has hurt the sector. We will review the stance once the interest
E&C Underweight rate cycle gets reversed
10
11. Debt Outlook
9.4 Yield curve 10-yr G-sec yield
9.30
9.2
8.80
9.0
8.30
8.8
7.80
8.6
(%)
7.30
8.4
6.80
8.2
4.4
0.0
0.9
1.8
2.7
3.5
5.3
6.2
7.1
8.0
8.8
9.7
10.6
11.5
12.4
13.3
14.1
15.0
15.9
16.8
17.7
18.5
19.4
• The 10 year benchmark G–Sec yield decreased by 29 bps in October to close at 8.73%.
• The shorter term papers rallied to close at 8.71 percent for a tenor of one year while medium term
paper yields decreased to 8.68 percent after a sharp rally last month. The one year AAA rated
corporate bond yields were at 9.8 percent while the ten year bonds traded at 9.89%.
• Though no easing has been seen in the inflation figures, a pause is expected by the RBI and no hike
may be seen in the immediate future though the central bank would monitor the inflation closely.
• Advance tax outflows in December may tighten the liquidity in the system further and the bond
market may witness temporary hardening of yields.
11
12. Debt Strategy
Category Outlook Details
We recommend investment into short term bond funds with
a 6-12 month investment horizon as we expect them to
Short Tenure deliver superior returns due to high YTM. We have seen the
Debt short term yields harden due to reduced liquidity and
consecutive rate hikes prompted by inflationary pressures. Till
these factors do not stabilize, we see Short term bond funds
and FMPs as an interesting investment option.
Some AA and select A rated securities are very attractive at
the current yields. A similar trend can be seen in the Fixed
Credit Deposits also. Tight liquidity in the system has also
contributed to widening of the spreads making entry at
current levels attractive.
RBI hiked the interest rates for the 13th time since march 2010 by
25 Bps, the repo rate now stands at 8.5% and reverse repo at
Long Tenure 7.5%. RBI has shown an intention to pause further rate hikes.
Our stance on long term debt remains neutral and we believe
Debt
that it may be a good time to start looking for interesting
investment opportunities in the medium term.
12
13. Forex
Rupee movement vis-à-vis other currencies (M-o-M) Trade balance and export-import data
100 0
Export Import Trade Balance (mn $)
-5000
0.0% 50
-10000
-1.0% USD GBP EURO YEN
-15000
0
-2.0% -20000
-50 -25000
-3.0%
-4.0% • India’s exports grew 10.8 percent in October, while imports
-5.0% grew by 21.7 percent. Impacted by the uncertainty in the global
markets, a drastic decrease has been seen in the exports hence
-6.0%
increasing the trade deficit to a four year high of USD 19.6
-7.0% billion.
140000
Capital Account Balance
• The INR has depreciated across all major currencies in 90000
the month. The Rupee started depreciating against the
USD from August 2011 and settled at Rs 52.10/ USD, as 40000
on November 23, 2011. This was a decrease of 18.28%
since August 2011. -10000
FY 10 (Q2) FY 10 (Q3) FY 10 (Q4) FY 11 (Q1) FY 11 (Q2) FY 11 (Q3) FY 11 (Q4) FY 12 (Q1)
• The major drivers for the INR to depreciate have been :
Withdrawal by FIIs, Strengthening of the USD, widening • Capital account balance was positive throughout FY11 and
current account deficit and lack of other capital inflows stood at `273133 Cr. at the end of the year. For FY 12, the
capital account is at `93,621Cr. for Q1.
like FDI etc.
• We expect factors as higher interest rates to attract more
• With winter, the demand for oil and consequently dollar investments to India. Increased limits for investment by
is only expected to move further upwards. FIIs would also help in bringing in more funds though
uncertainty in the global markets could prove to be a
dampener.
13
14. Commodities
Though fundamental concerns still exist in the Eurozone, 31000
Gold
29000
the group of 6 central banks have offered low cost dollar 27000
25000
credit lines to European banks. In the domestic market, the 23000
Precious fundamental factors largely remained unchanged and 21000
19000
Indian markets had seen fresh buying demand during the 17000
Metals festive Diwali Season despite prices staying higher. If the
15000
31-Aug-11
30-Nov-10
31-Jan-11
30-Apr-11
30-Nov-11
31-Mar-11
30-Jun-11
31-Jul-11
28-Feb-11
31-May-11
30-Sep-11
31-Dec-10
31-Oct-11
current solution paves the way for a solution to the crisis
and if globally, the currencies strengthen, we may witness a
slight dip in the Gold prices as gold is inversely correlated
to the greenback hence providing a hedge.
130.0
Crude
The recent bout of global uncertainty have pressurized 120.0
110.0
crude oil amid concern of double dip recession in the US 100.0
and global economy slipping into red. We expect crude oil 90.0
80.0
Oil & Gas prices have topped out in the interim and can only move 70.0
down from here on. We have seen some firmness in the 60.0
31-Aug-2011
31-Dec-2010
31-Oct-2011
30-Nov-2010
31-May-2011
30-Nov-2011
31-Jul-2011
31-Jan-2011
28-Feb-2011
31-Mar-2011
30-Sep-2011
30-Apr-2011
30-Jun-2011
prices post the announcement of Greece bailout package,
nevertheless, any such temporary uptick shall not be
sustained. Expect crude oil prices to be steady.
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15. Real Estate Outlook - I
Asset Classes Tier-1* Tier-II**
Strong pre-launch sales still keeps the developers far from The demand is keeping the Tier II cities afloat, the
any correction, though sales are down to alsmost 35% infrastructure development in these cities have made the
since last quarter, there is no correction visible. The over- residential development spread across the city limits. On
supplied locations are stagnant and would be similar for an average price is still affordable. Key development
the coming 2 quaters. Entry points anywhere from Rs. developer are seeing demand of 3BHK and luxury
3000 - Rs. 6000 per sqft in cities like Pune, NCR, development but are only doing well if the project size is
Residential Hyderabad, Chennai and Bangalore are still considred limited to 100-150 units. The trend seems to be favorable
lucarative by first time home -buyers depending on their since there is lot of Investor demand comes from smaller
usage. The retail investors (2nd home buyers) and HNI cities closer to these Tier-II & III cities. Excellent time to
investors vary or delaying their decision with expectation buy anything between Rs. 3000-3500 sqft with known
of correction. Mumbai stands still tall with prices on their developers.
peak in over-supplied market also. Correction again are
reported only on media and not on ground level.
Advice Price point entry is the key. Good time to sell. Time right to buy, look at 3-8 acre developments only
Still in the shadows of over-supply and cautious expansion Commercial segment not that significant, but unlike Tier-I
approach by corporate, this segment has gone through the price differentiation is double favoring commercial
correction. Rates per sqft have seen almost 30% down- since most of them are in CBD areas.
trend and will be stagnant for the coming 2-3 quarters.
Commercial/IT
Surely, the segment is at the down-tip of the cycle, and is
the best opportunity for companies looking for long term
holding of real estate office space.
Advice Excellent time to buy smaller office spaces at CBD areas Space not defined well, depends on independent needs.
15
16. Real Estate Outlook - II
Asset Classes Tier-1* Tier-II**
The FDI allowance is given lot of impetus to this Retail is slow in these markets; unorganized markets
sector, its been now almost 3 years since retail has are still a hot choice. Most high-street locations are
seen a major transformation on all its business expensive to own thus have a high lease rental and
aspects and have been built to suit Indian way for have witnesses heavy churn. Investment would
consumerism. Low cost, high reach, heavy variety, always have capital protected due to dearth of
Retail less innovation, existence with competition, available space..
maximizing bottom line than top-line approach have
been making the retailers smarter. Revenue share
model with a built in MG is how the deals are done
Most interesting times, traded now more as Still available cheaper, plotted development is a hit
commodity, very fastly getting absorbed, locked. since the trend of standalone homes are prevalent.
Non-real estate sector see immense opportunity
Land since it can be used as tangible and most credible
pledge against business
Advice Hold Land, if Owned Hold Land, if Owned
1. Tier I* markets include Mumbai, Delhi & NCR, Bangalore, Pune, Chennai, Hyderabad and Kolkatta
2. Tier II* markets includes all state capitals other than the Tier I markets
3. The IC note is proposed to be presented every quarter
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17. Why Karvy Private Wealth?
Open Architecture – Widest array of products
We are an open-architecture firm at two levels – asset class level and product level :
• Offering COMPREHENSIVE choice of investing across all asset classes
• Offering EXTENSIVE choice of multiple products from different product providers under each asset class
Intensive Research
We closely track the historical performance across asset classes, sub-asset classes and product providers to identify, evaluate and
recommend investment products (KPW’s or third-party). We have our own proprietary methodology for evaluating products; for
product providers, we also note the investment style and risk management philosophy. Our comprehensive analysis determines
truly exceptional performers to be added to your portfolio
Honest, unbiased advise
Group-wide, we have no Mutual Fund or Insurance products of our own unlike most of the financial services groups (banks or
broking houses), who are doing wealth management. Neither do we have exclusive tie-up with any single insurance company like
all banks do.
The KPW 3-S Service promise:
When you become a Client of KPW, besides getting intelligent & practicable Investment Advice, you get the benefit of “The KPW 3-
S Service Promise” :
• Smooth and Hassle Free – Attention, Service & Convenience
• Sharp and proactive – Portfolio monitoring and tracking
• Smart –Incisive insights on markets and Investment products
Pedigreed Senior Management Team
A talented team of leaders with global and Indian experience, having a unique blend of backgrounds of wealth management,
private equity, strategy consulting and building businesses powers Karvy Private Wealth and its operations.
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18. Disclaimer
The information and views presented here are prepared by Karvy Private Wealth or other Karvy Group companies. The information contained
herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness
thereof. This material is for personal information and we are not responsible for any loss incurred based upon it.
The investments discussed or recommended here may not be suitable for all investors. Investors must make their own investment decisions
based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting
upon any information or analysis mentioned here, investors may please note that neither Karvy nor any person connected with any associated
companies of Karvy accepts any liability arising from the use of this information and views mentioned here.
The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above-mentioned companies from
time to time. Every employee of Karvy and its associated companies are required to disclose their individual stock holdings and details of trades,
if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of
shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All
employees are further restricted to place orders only through Karvy Stock Broking Ltd.
The information given in this document on tax are for guidance only, and should not be construed as tax advice. Investors are advised to consult
their respective tax advisers to understand the specific tax incidence applicable to them. We also expect significant changes in the tax laws once
the new Direct Tax Code is in force – this could change the applicability and incidence of tax on investments
Karvy Private Wealth (A division of Karvy Stock Broking Limited): Operates from within India and is subject to Indian regulations.
Mumbai office Address: 702, Hallmark Business plaza, Sant Dnyaneshwar Marg, Bandra (East), off Bandra Kurla Complex, Mumbai 400 051
(Registered office Address: Karvy Stock Broking Limited, “KARVY HOUSE”, 46, Avenue 4, Street No.1, Banjara Hills, Hyderabad 500 034)
SEBI registration No’s:”NSE(CM):INB230770138, NSE(F&O): INF230770138, BSE: INB010770130, BSE(F&O): INF010770131,NCDEX(00236,
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No.: INP000001512”
18
19. Contact Us
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Pune 020-30116238
Email: wealth@karvy.com SMS: ‘HNI’ to 56767 Website: www.karvywealth.com
Corporate Office : 702, Hallmark Business Plaza, Off Bandra Kurla Complex, Bandra (East), Mumbai – 400 051
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