Macro

BDI Drop No Big Deal? Careful with Shippers

In the MarketVision Newsletter #1 I mentioned the Baltic Dry Index, and that it may be a concern as the rate was the lowest in nearly two years.

Calculated Risk pooh poohs that idea. The fall is explained by more ships being built, and the current fall may be because of the floods in Queensland being empty as there’s too much flooding to be able to put ore on board.

That might be true. The index rose from a bottom in 2009 to fairly large values in 2010 (on a percentage basis, it went up more than 100%) and then has had a squiggly move.

Primary Articles Inflation Up to 20%

Welcome, 2011. The last week of the 2010 – as of December 25th – now shows Primary Articles Inflation at 20.2%.

Primary Articles Inflation at 20.2%

Senseless Sensex EPS Projections, and a Dividend Yield Problem

I wonder why I get all worked up when I see utterly bizarre Sensex EPS estimates. Basically, the modus operandi seems to be:

  1. Pick a number out of your a** thin-air.
  2. Blurt it out on TV or other media with a tie on, and carry the name of big-name finance company.

In the Sensational Sensex EPS Story, in July 2008, I noted that projections of the Sensex EPS between Feb and March 2008, for the EPS ending March 2009 (note: nearly two years ago) was 1000. Four big name fellows said so. Where were we at the end of March 2009?

750. The Sensex EPS was Seven hundred and fifty. A full 25% below what they thought just one year earlier.

The Senseless Sensex EPS Prediction story continues.

Primary Articles Inflation at 15.35%, up 2%

Primary articles is up 2% since last week, and stands at 15.35%.

Primary Articles Inflation at 15.35%

I’d mentioned that last year this was a benign period, and I expect headline inflation numbers to stay high for the next few weeks anyway. Add to it the fuel price hikes, skyrocketing onion prices, increase in sugar prices (not yet in India) and the transition into manufactured goods and WPI as a whole is likely to stay very high.

(Note: Overall inflation is only reported once a month. PA inflation is announced every week)

Past revisions continue to be a problem, as the 16 Oct. data was revised to 17.91%, substantially higher than the first reported 16.62%.

Primary Articles Inflation Revisions

 

At Yahoo: Innovations and Curses

At Yahoo, I write about Innovations and Curses:

In the last 10 years, India has grown at a rate that defies belief. Yet, the rate of growth and the dramatic increase in technology that accompanies it has come with certain curses — the side-effects of what has been a fantastic decade for India.

Curse #1: Floating Rates, Pre-closure charges, Teaser-rates

RBI Keeps Rates Unchanged; Liquidity Tight

RBI keeps rates unchanged at 6.25% (repo) and 5.25% (reverse repo). 

The Statutory Liquidity Ratio (SLR) is down to 24% (down 1%). There’s also a relaxation of another 1% of assets under a temporary liquidity facility until Jan 28, 2011.

Inflation: November 2010

WPI monthly inflation for Nov 2010 was announced at 7.48% – substantially lower than the last month’s 8.58%.

Readings: Bank Elite, MFI, MoneyLife, 99ers

A Secretive Banking Elite Rules Trading in Derivatives by NYT. How the big bankers won’t let in the small guys into the market they control and keep opaque.

At Forbes, In India, Size Does Matter. On how the MFI industry has screwed itself by going national, rather than local. Yeah, that’s true of countries too – when they’ve borrowed from foreigners, it’s that much more palatable to say “let’s default”. And bankers, who only originated credit and packaged the loans they gave to other people. When you don’t know the person who lent you money it’s much more morally acceptable to default in a crisis.

The Oddities of US Inflation

Krugman says “Disinflation Confirmed”. Because if you remove housing from US core inflation the graph still slides downwards.

Let’s see – Core inflation means inflation minus food and energy. Then you remove housing. And as part of inflation calculations you do “hedonic adjustments” – that you can get a BETTER product for the same price – like a TV at $330 has more features than last year, so you reduce the price of the TV in your inflation index price set to say $195. Then they do “substitution” – meaning if the price of beef goes up then people will buy something cheaper, say chicken, so you put the cheapest of the lot in the index. And “reweighing” meaning people use less of what’s expensive, so reduce it’s weight.

Readings: Japan, Expert Advise, Sec Theater

Japan, after the bubble. An old piece but amazingly informative about how real estate screwed that country. In the same context, WSJ on the London Real Estate Bubble.