Why India’s turning into everyone’s favorite EM country

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Is this third wave of financial crisis? Goldman thinks so

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Emerging markets aren’t just suffering through another market rout — it’s a third wave of the global financial crisis, Goldman Sachs said.

“Increased uncertainty about the fallout from weaker emerging market economies, lower commodity prices and potentially higher US interest rates are raising fresh concerns about the sustainability of asset price rises, marking a new wave in the Global Financial Crisis,” Goldman said in a note dated last week.

The emerging market wave, coinciding with the collapse in commodity prices, follows the US stage, which marked the fallout from the housing crash, and the European stage, when the US crisis spread to the continent’s sovereign debt, the bank said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

China imports collapse in September, exports remain weak

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tech bubble: This is ‘money in your mattress’ time

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Funding for tech start-ups appears to be going strong, but there’s a looming concern that it could be too strong — strong enough that it’s already fueled the next tech bubble.

Some investors and analysts have been reluctant to say outright that we’re in the midst of overgrowth in tech.

Fifteen years ago, the sector was relatively young, but now with established tech companies like Apple, Microsoft and Facebook leading the charge and better tech representation among the S&P 500, the industry has matured, according to Angelo Zino, analyst at S&P Capital IQ, in a phone interview.

But relatively firm-footed tech giants are one thing. Start-ups are an entirely different world. The market for tech start-ups today may be just as speculative as it was during the first bubble, suggested Nick Bilton, technology and business columnist at The New York Times.

“The valuations of companies are just completely out of whack and no one has any idea where these numbers are coming from,” Bilton said in an interview with CNBC, adding that the existence of billion-dollar start-up “unicorns” in tech, is a major sign that we’re in a tech bubble.

Among those unicorns is ride-hailing company Uber, worth USD 51 billion; electronics company Xiaomi, worth USD 46 billion; and short-term apartment rental site Airbnb, worth USD 25.5 billion, according to a recentFortune ranking.

Bilton points to the skyscraper index as further evidence of a new tech bubble.

“At the beginning of every bubble burst or every recession, there’s always been a race to build the biggest skyscrapers in the world. And it’s usually from money that has come in from bubble-gotten gains,” he said. “Often when you have these buildings built, there isn’t anyone to fill them and it starts to be one of the things that causes the bubble to burst,” Bilton posited.

The skyscraper indicating a bubble this time around, according to Bilton, is the Salesforce Tower, which is currently under construction. That skyscraper is expected to stand 200 feet higher than the Transamerica Pyramid, which is currently the tallest building on the San Francisco skyline.

But whether there’s a bubble at risk of bursting or just some high-flying start-ups that need to gear up for a descent, Bilton seems conservative.

“My best advice to protect yourself is put your money in your mattress,” Bilton said.

But risk is par for the course at VC firms.

“Most venture capitalists … are absolutely comfortable with tech companies needing time to reach profitability,” said Tony Tjan, CEO and managing partner at venture capital firm Cue Ball Capital, in an email.

“What you are looking for first and foremost is great people. Human capital matters more than anything in good and bad markets,” Tjan said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

‘Animal spirits’ could get Europe out of a hole

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Does the Fed want stocks to rise or fall?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Investors in Asia brace for a jam-packed week

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Traders in Asia are gearing up for an eventful week – with a slew of key economic data slated for release by the region’s three largest economies – China, Japan and India – on top of central bank decisions in South Korea and Indonesia.

The focus will no doubt be on China – which is due to publish September trade numbers on Tuesday, foreign direct investment figures on Wednesday as well as consumer and producer inflation data on Thursday.

“Chinese imports and exports likely fell in September despite the lower yuan. Foreign direct investment in China is also slowing, as overcapacity in housing‐related sectors drags on growth,” said Alastair Chan, economist at Moody’s Analytics.

The raft of data comes ahead of China’s highly-anticipated third quarter gross domestic product (GDP) report on October 19, which is expected to show a further loss of growth momentum in the world’s second largest economy in the second half of the year.

Investors will also get a health check on India’s economy, with September trade, consumer inflation and August industrial production data due on Monday and September wholesale inflation on Wednesday.

While India is largely a domestic demand driven economy, the country has been feeling the pinch from China’s slowdown via slackening exports.

In late-September, the Reserve Bank of India (RBI) surprised markets by slashing its key interest rate by 0.50 percentage points to 6.75 percent in a bid to boost economic activity.

Elsewhere in the region, Japan will publish consumer confidence data for September, which are expected to show sentiment waning amid mounting concerns around the country’s economic outlook.

Economists warn that the risk of a technical recession in Asia’s second largest economy is growing due to weakness in recent data.

Data on August machinery orders published last week missed forecasts by a wide margin. Machinery orders – a leading indicator of capital expenditure – fell 5.7 percent on month, versus expectations for a 3.2 percent increase, and followed a 3.6 percent decline in the previous month.

Central bank watch
On the central bank front, the Bank of Korea and Bank Indonesia are holding monetary policy meetings.

Read MoreWhat really sets wealthy investors apart

Korea’s central bank, which will deliver its decision on Thursday, is expected to keep interest rates on hold at 1.5 percent.
“Admittedly, Korea’s economy continues to face headwinds, particularly on the external front, and low inflation suggests the central bank has scope to cut interest rates further,” said Krystal Tan, Asia economist at Capital Economics.
“However, given concerns about high household debt and our anticipation of a continued recovery in the domestic economy, we expect the BoK to keep rates on hold not just at its next meeting on 15th October, but also for the rest of 2015 and 2016,” she added.
Bank Indonesia is also projected to stand pat on Thursday, maintaining its policy rate at 7.5 percent.
“The currency remains under pressure after a strong selloff on fears of U.S. monetary policy normalization,” said Faraz Syed, associate economist at Moody’s Analytics.
“Low foreign exchange reserves make Indonesia susceptible to capital flight, so we are unlikely to see the central bank cut rates soon. We see an outside chance of a rate hike later in the year if there’s an increase in volatility and the rupiah falls further.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Asian stocks mostly rise, but Sydney lags

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Asian stocks outside Australia and Singapore advanced on Monday, tracking the slightly stronger lead from Wall Street.

Major US averages finished higher on Friday, with the Nasdaq Composite leading gains by notching up 0.4 percent as investors digested dovish signals from the US Federal Reserve minutes. The blue-chip Dow Jones Industrial Average and the S&P 500 ticked up 0.2 and 0.1 percent respectively.

Meanwhile, markets in Japan are closed for the Health and Sports Day holiday.

Mainland markets up

China’s share markets notched up early Monday, with the Shanghai Composite ticking up 0.2 percent, following a report by the China Securities Journal that quoted a senior central banker saying that the country’s stock market correction is “almost over.”

Yi Gang, deputy governor of the People’s Bank of China (PBOC) told an annual meeting of the International Monetary Fun (IMF) and World Bank in Peru that the corrections in the mainland’s equity market have had limited impact on the world’s second-biggest economy as Beijing has taken a series of measures to avoid systemic risks, Reuters reported.

Among other indexes, the CSI300 Index edged up 0.3 percent and the smaller Shenzhen Composite advanced 0.7 percent.

ASX drops 0.8 percent

Australia’s S&P ASX 200 snapped a five-day winning streak, hurt by declines in key banking and resources heavyweights.

National Australia Bank and Commonwealth Bank of Australia were the biggest losers in the financial space, down about 1 percent each. Westpac and Australia and New Zealand Banking sagged 0.7 and 0.3 percent respectively.

In the energy space, Santos and Oil Search widened losses to nearly 3 percent each, while Woodside Petroleum declined 1.8 percent. Market bellwether BHP Billiton fell 1.6 percent.

Kospi adds 0.1 percent

South Korea’s Kospi index hovered just above the flatline amid mixed trading among major counters.

Blue chips such as Samsung Electronics and Hyundai Motor eased 1.2 and 0.6 percent respectively, while steelmaker Posco rose 2.5 percent.

Shares of Coway slipped 0.4 percent on the back of news that food-to-entertainment CJ Group is considering a bid for the water purifier sales and rental firm, according to a statement by a CJ Group spokesman on Monday.

Taiex gains 0.9 percent

Taiwan’s weighted index charged up in early trade, with large-cap Taiwan Semiconductor Manufacturing Co. rising 1.1 percent.

Other tech-related plays also got off to a positive start; Hon Hai Precision Industry bounced up 1.4 percent, while Pegatron powered up 6.2 percent.

Southeast Asia rebounds

Shaking off a negative open, Malaysia’s FTSE Bursa Malaysia KLCi charged up 0.6 percent while Singapore’s Straits Times index clawed back losses to hover in neutral territory.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Wall Street readies for earnings, volatility

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As third-quarter earnings season gets underway next week, traders are bracing for more volatility in a range-bound market.

“I think we’re going to range trade from here until we get (clarity on economic growth),” said Mustafa Sagun, chief investment officer of Principal Global Equities. “Everyone’s expecting a fourth-quarter rally, yet if it’s not supported by earnings, that year-end rally will come in a very volatile way.”

“Guidance will matter more than what the earnings do,” he said.

Many analysts say the earnings reports are critical for fourth-quarter gains in stocks and finding clarity on the severity of an economic slowdown, especially amid mixed messages from the Federal Reserve.

Stocks closed higher Friday, with the S&P 500 eking out a gain of 1.46 points to 2,014.89. The index rallied 3.26 percent for the week, its best for 2015.

The major US averages ended a solid week out of correction territory, or within 10 percent of their 52-week highs. The S&P 500 and Dow Jones industrial average topped their 50-day moving averages, while the Nasdaq composite ended just 5 points below.

JPMorgan Chase is scheduled to report after the close Tuesday, beginning a heavy week of earnings reports from financials, which includes Bank of America and Wells Fargo on Wednesday, and Citigroup and Goldman Sachs on Thursday.

Read More: Forget the Fed, this will drive stocks: Experts

Earnings estimates for the sector are down to growth of 3.0 percent versus expectations of 6.1 percent growth two weeks ago, according to S&P Capital IQ.

“Part of that has to do with the Fed (not raising rates),” said Lindsey Bell, senior analyst, global markets intelligence, S&P Capital IQ. “Fixed income and commodities trading is expected to be down for the quarter. You get a pretty good feel for the health of the economy from the banks because they make loans.”

To be sure, if earnings continue a recent pattern, results should beat the lowered expectations.

Wall Street will also have plenty of economic data and comments from Federal Reserve policymakers to digest as the timing of a rate hike remains uncertain.

“I think there’s still more volatility ahead until the Fed confirms the US economy is on good footing,” said Kevin Mahn, chief investment officer of Hennion & Walsh Asset Management.

The Fed’s September meeting minutes released this past Thursday indicated policymakers were further from raising rates last month than many thought, as FOMC members were concerned about reaching their inflation target and the impact of a global economic slowdown. Fed speakers have generally maintained the central bank could still raise rates this year.

Read More: The ‘Icahn bottom’? Where his call for doom stands

Chicago Fed President Charles Evans is scheduled to speak again Monday, as is Fed board member Lael Brainard. On Tuesday, St. Louis Fed President James Bullard is due to present remarks, while the New York Fed’s William Dudley speaks Thursday.

The Federal Reserve’s Beige Book, a report of regional economic activity in the United States, is due for release Wednesday.

Other key data out next week include retail sales and the producer price index Wednesday, and the consumer price index Thursday. Industrial production, the Job Openings and Labor Turnover Survey and consumer sentiment are due Friday.

Joseph Lavorgna, chief US economist at Deutsche Bank Securities, said the economic reports are last key data out before the Fed’s meeting at the end of October.

“The economy is still doing OK and interest rates are going to stay low. Equities should do reasonably well,” Lavorgna said. “The economy is plodding along. There’s not much risk of recession.” He expects sub-2 percent GDP growth in the third quarter.

Read More: Market on track for THIS bullish trend: Strategist

In the last few weeks, soft reads on the US manufacturing sector and a widening of the trade deficit have lowered some expectations for real GDP growth.

“I think what to keep in mind next week is the retail sales,” said Ben Garber, economist at Moody’s Analytics Capital Markets. “You want to see how strongly the domestic economy is holding up.”

“We could see positive support to stocks in the consumer cyclical sectors that are contrast to energy and mining,” he said.

The beaten-down energy and materials sectors were the top performers in the last week and will remain a focus in coming days. Crude oil rallied more than 8 percent last week, helping the energy sector gain nearly 7.8 percent for its best week of the year so far.

This was a “particularly good week for emerging markets, commodities and other risk assets,” said Eric Stein, co-director of global fixed income at Eaton Vance Management. “Starting a new quarter, there certainly seemed to be a risk-on sentiment. People are still up in the air on what the Fed is going to do. (There’s a) bit more stabilization in China.”

Mainland Chinese markets closed the shortened trading week higher and will get back into full swing after a weeklong holiday.

In the United States, banks are closed Monday for the Columbus Day holiday. Markets remain open.

Read More: NY Fed’s Dudley: Market raised questions about global economy

Concerns about Congress’ ability to smoothly resolve key fiscal negotiations adds to uncertainty for markets. While the deadline for Congress on the budget and debt ceiling talks is still several weeks away, no clear leader for the House of Representatives has emerged since House Majority Leader Kevin McCarthy pulled out of the race for speaker Thursday.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow