"If I were
running the world I would have it rain only between 2 and 5 a.m. Anyone who was
out then ought to get wet."
—William Lyon Phelps (American, 1865-1943)
Word
for the day
Etiolate (v)
To cause to become weakened or sickly; drain of color or vigor.
Malice
towards none
RTI for BJP: How many BJP
members have questioned the #Demonetization move?
If none, then the party is
in serious need of introspection, as the very core of democracy may be
weakening.
If there are voices of
dissent, why don't people hear it?
First random
thought this morning
Budget 2017: To promote investment and entrepreneurship, the
government must introduce greater deal of predictability in policy and tax
regime. It should definitely lay to the rest all scope for speculation about
the policy matters.
One good beginning would be to irrevocably specify the treatment
of capital gains on transfer of securities for next 10years, whatever it may
be.
Expect occasional "Attaboy" and few cookies
The next two month are likely to be one of the most interesting
phases in the global financial markets. The markets participants shall be
keenly observing what the US president elect Donald Trump would say (won't say)
or do (won't do) after his inauguration on the coming 19th January.
The participants shall also be keeping a close watch on the US
Federal Reserve Chairperson Janet Yellen and Chinese leadership, especially the
premier Li Keqiang.
It is widely expected that we may almost immediately see a trade
war between US and China; build up of tension between White House and FOMC;
rise in protectionism leading to disruption in global corporations; and
realignment of US strategic partnerships. Drastic changes in policy towards
foreign workers and capital flows are also feared.
The unusual personal bonhomie between President Trump and
President Putin is also keeping the analysts busy.
A number of reputable experts have warned that a trade war with
China could drag the world into 1930s' like severe recession.
FOMC meets on 31 January and 1st February and then again on 14-15
March. So far, the Chairperson Yellen has not been supportive of the fiscal
profligacy proposed by the President Trump. A higher than warranted rate hike
by Fed, could actually damage the fragile recovery US economy has witnessed in
past 6 quarters. The bond market appears to be already factoring higher
deficit, and hence higher yields in midterm.
A dramatic tightening of VISA rules and immigration policy, could
hugely disrupt the businesses, especially the technology business that depends
hugely on low cost skilled foreign workers and construction business that is supported
by low cost foreign labor (including illegal immigrants). A temporary
demand-supply mismatch in labor market, at a time when businesses will have
incentive to relocate manufacturing to US, may lead to materially higher wages.
Intuitively, I am not losing my sleep over it, as of now.
In my view, a lot of Trump rhetoric may remain just that,
rhetoric. Like Arvind Kejriwal, he will spend a better part of his 4yr term in
managing the numerous conflicts of interests and personalities.
From India viewpoint, I feel - a US-China trade war could possibly
benefit India, as Trump cannot expect to win this war without help from India,
Russia, Japan, UK and many others.
A stronger USD, consequent to higher rates would eventually be
deflationary, helping India on current account.
In his acceptance speech Trump, said if you are not with us, you
are against us. We Indians are more than eager to be him. Expecting occasional
"Attaboy", and few cookies would not be unreasonable.
In between, we have union budget for FY18 on February 01 and MPC,
makes a monetary policy statement on February 08.
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