1. Follow the leader
The number of India skeptics has grown sharply in past one year.
Numerous reports have been written to establish that the last pillar of
support, viz., consumption, is likely falling rather sharply and the economy
will fail to break the vicious cycle. The optimists were in minority and lacked
conviction. Very few of them actually walked their bullish talk.
Unilever Plc has enlightened the path for everyone. We believe
that the FMCG giant with over 100yrs’ experience of working across the globe
certainly knows more than the analysts who cannot tell difference between a
shampoo and hair conditioner.
We shall go by Unilever’s assessment of India’s consumption
story and stay overweight for next decade at the least.
2. Do not follow the leader
The Supreme Court today indirectly hinted that the country’s
leadership may be exercising undue influence on the national investigating
agency CBI. It had been our consistent view that most of the problem currently
afflicting the country may be stemming from a weaker leadership. SC’s censure
today, in context of coal block allocation scam, confirms our belief.
Leadership is essentially about leading – assuming
responsibility, showing the way. Leadership is not about making excuses.
Following a weak leader will only hold you back and destroy your character.
3. Austerity is a spring phenomenon
Since past couple of week the global economist and banking
communities are intensely debating the relevance of austerity in a declining
economy.
The consensus that is emerging appears, and rightly so, to be
favoring postponement of austerity program to better times.
In our view, austerity works best when going is good. You
maintain a balance between your earnings and expenditure and save some for the
bad periods. If you have not saved enough for bad period and a medical
emergency befalls upon you, you do not become austere at that point in time.
You beg, borrow and steal to save your life. Once back on your feet, you can
repay the debt and practice austerity for future. If you die,
well….. you die.
Currently, the global economy is in ICU. Not a good time to
save.
4. Crisis of confidence for Oracles
In past three weeks most global banks have issued reports
suggesting sudden demise of gold bull market.
The enthusiasm of gold consumers seen across the world however
suggests that these Oracles no longer enjoy the confidence they used to prior
to 2009.
One of the big 4 was however quick to retract its bearish call.
Others are still to follow. But who cares!
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