Friday, August 31, 2012


 Cut throat competition in the electronics business coupled with "APPLE" domination and a strong Japanese Yen has reduced SONY's market capitalisation to a shadow of it's former self.

The thing is - Can SONY be cool again?
Does it turn to mobile handsets and hardware or does it focus on the entertainment space (music, video and motion pictures)?
It's way behind Samsung in the mobile phone market and faces cut throat competition in the LCD market although it's "BRAVIA" brand has excellent brand recall in this commoditized business.

Kazuo Hirai (new CEO since April 2012) clearly has a lot to do, as he works to engineer a turnaround at SONY!

Thursday, August 30, 2012

$16,000,000,000,000 !!!!

Well depending on where you read it, US Debt has now already crossed / is about to cross the $16 trillion mark!
(Yes, that's a large number of ZEROS!)

What is worrying is the rate at which it has risen this past year and the prudent market watcher can only worry about the cost of servicing this massive debt in the future once interest rates rise!!

Meanwhile, markets were trending upwards ahead of  the Federal Reserve's annual  symposium at Jackson Hole. However, it now appears that we may not hear anything new and markets are heading into the annual meet in a rather lacklustre manner.
So no QE3 for now I guess??

"""""November 16, 2011 was a historic date: that's when the US officially surpassed $15 trillion in debt for the first time since World War 2. We celebrated it by cheering $15,OOO,OOO,OOO,OOOBAMA. Today, August 28, 2012, is when we can unofficially celebrate again, because 286 days after the last major milestone was surpassed with disturbing ease, total US debt following today's $35 billion auction of 2 Year bonds is, well, in a word: $16,OOO,OOO,OOO,OOOBAMA! 
The result: $16.05 trillion, which is what the debt to the penny will officially show next week.
Of course this will be the total following the balance of this week's auctions. In the meantime, the US is now officially between that ceiling and a $16 trillion floor.
But wait. You aint's seen nothing yet. At this rate of growth, total US debt will surpass:

  • $17 trillion on June 10, 2013;
  • $18 trillion on March 23, 2014;
  • $19 trillion on January 3, 2015; and
  • $20 trillion on October 16, 2015
And on, and on, and on..."""""

Some clear thinking on the debt

""""August 29, 2012Rome, Italy
If you haven’t heard yet, the United States of America just hit $16 trillion in debt yesterday. On a gross, nominal basis, this makes the US, by far, the greatest debtor in the history of the world. 
It took the United States government over 200 years to accumulate its first trillion dollars of debt. It took only 286 days to accumulate the most recent trillion dollars of debt. 200 years vs. 286 days.
This portends two key points: 
1. Anyone who thinks that inflation doesn’t exist is a complete idiot; 2. To say that the trend is unsustainable is a massive understatement.    """""""

Monday, August 27, 2012


As the Indian consumer consumption boom continues, a combination of moderating growth rates, high inflation and low real rates on investments is taking a toll on India's Net Financial Savings rate. 

""According to preliminary estimates released by the Reserve Bank of India (RBI), net financial savings moderated to 7.8% of GDP in F2012 from 9.3% of GDP in F2011 and 12.2% of GDP in F2010.
Net Financial savings comprises cash investments, deposits with banks and non bank companies, investments in shares, debentures, mutual funds, small savings and also life insurance, provident and pension fund

RBI attributed the decline in net financial savings to persistently high inflation, leading to low real rates on bank deposits and small savings funds, coupled with uncertain global environment adversely impacting equity market returns, leading households to favour investments in valuables such as gold. In addition to these factors, we believe slower urban job creation and income growth would also have affected the rate of household savings."""


Sunday, August 19, 2012

Chart of the Day: Chinese stocks in steep downtrend & CBOE VIX AT NEW LOWS

As stock markets around the world continue to edge upwards, the Chinese Equity Markets and the CBOE VIX have both been trending downwards.

Chart of the Day - Chinese stocks in steep downtrend

Equity valuations continue to be driven by hopes of QE3 and Bailouts/handouts by Central Bankers rather than fundamentals, which at this stage are still looking rather weak.

As the VIX trends to new lows, it's important to take profits in stock portfolios and rebalance them towards more stable large cap companies that preferably have less leverage than their mid-cap counterparts.

Friday, August 17, 2012


A weak Indian Rupee, unyielding Crude Oil prices and an unsustainable petroleum subsidy policy by the Indian Government have resulted in Indian Oil Corporation ( IOC) reporting a massive loss of Rs. 22,451 crore for the quarter ended 30th June 2012.

India will have to urgently address its petroleum subsidy policy. The Oil Marketing Companies (HPCL, BPCL, IOCL), Upstream Oil Companies (ONGC, GAIL) and the Indian Government cannot continue to subsidise petroleum products consumed by the Indian public at this rate.

Despite the Oil Sector being a major source of revenue for the government via numerous duties levied at the state and central govenment level; massive subsidies have resulted in heavy borrowings for Oil marketing companies.

The article below highlights the ongoing crisis in the case of IOC, that has now pushed up its debt levels to almost Rs.90,000 Crores as of June 2012, and is incurring interest costs as it awaits reimbursement by the Government.

IOC: Marred by uncertainties

INDEPENDENCE DAY -15.08.2012 - INDIA @65

Well, after a year of policy inaction, high inflation, and slowing growth; it's now 65 years since Indian Independence.

Below are links to a couple of articles that are well worth a read.
Ruchir Sharma and Swami Aiyar have an interesting take on Indian Independence and the Outlook for India's economic growth rate amidst a slowing and deleveraging global economy

India's breakout path: It needs to break global growth script, not slavishly follow it

Independence Day: Why Partition was a good thing for India