Do it yourself

The legendary Warren Buffet has been on an equity portfolio selling spree in recent weeks. His fund, Berkshire Hathaway, has reportedly raised over US$275bn in cash; which is over 20% of total assets under management. His selling in the stocks of Apple Inc and Bank of America have been reported the most. Apparently, either his team is not comfortable with the present market conditions (valuation, growth, macro, geopolitics etc.) or believes that they can get much better buying opportunities in near to short term, or both. They may be looking for better buying opportunities in terms of better stocks or better price points in the same stocks. It may be pertinent to note that it is not Berkshire Hathaway alone. A number of reputable investors have taken note of the conspicuous warning signs flashing on billboards for the past few months in particular. Yen carry-trade Hike in the policy rates by the Bank of Japan (BoJ) and strengthening of Japan is perhaps the most talked about event...

  Last week the benchmark Nifty50 crossed the 25000 level for the first time ever. Statistically speaking, it’s just a number and does not mean much in the broader picture. Nonetheless, it is noteworthy in the current context, because this milestone was crossed amidst a flurry of news flow which calls for closer attention of investors. BoJ rattled the markets by deepening commitment to normalization First of all, the Bank of Japan hiked the policy rates by 15bps to 0.25%. Governor Kazuo Ueda committed that if the economy and prices move in line with our projection, we will continue to raise interest rates. BoJ does not see 0.5% as any key barrier when raising rates; clearly indicating that the shift in BoJ’s monetary policy is definite. A steeper hike by the BoJ, than currently estimated, could present several short-term challenges for the global markets. A stronger yen on rising JGB yields could (i) adversely impact Japanese exports; (ii) worry the JPY borrowers who may have...

 A recent Reuter’s article ( see here ) drew attention towards some ominous signs emanating from the bond pricing of emerging markets that are more vulnerable to default on their sovereign obligations. Noting the signals like weakening currencies, bond spread widening beyond 1000bps, and dwindling Fx reserves, it concludes that a record number of developing economies might be “in trouble” now. More than US$400bn worth of sovereign debt could be facing default. While the countries like Russia, Sri Lanka, Lebanon, Zambia etc. have already defaulted on their obligation, the usual suspects like Argentina and Pakistan etc. appear on the precipice of a default. The serial defaulter Argentina (US$150bn); Ecuador 9US$40bn); and Egypt (US$45bn) may actually default much sooner. If the war drags on for a couple of more months, Ukraine may also default on US$20bn debt payments. Of course, the sovereign defaults are not new and the US$400bn default might not look massive in the context of ...

  Markets in 1H2022 – As tough as it could be The first half of the current calendar 2022 was perhaps one of the toughest six month periods for the global markets. In fact, for global equities, the 20% fall in MSCI All Countries index 1H2022 during 1H2022 is the worst ever on record. The global government bonds are also having the worst year in 150years, as the global central bankers reversed the course of monetary policy. Indian benchmark yields have risen 14.5% during 1H2022. Energy and Food prices have risen in this period, largely due to war between Russia and Ukraine; but other commodities like industrial metals, steel, and precious metals have mostly shown a downward trend. Gold (-1.3%) is trading marginally lower while silver (-15.6%) has lost in line with industrial metals. The new age assets like cryptocurrencies have also been decimated in the global melee. The bellwether bitcoin lost over 58% of its value during 1H2022. USD has gained close to 10% during 1H2022, while JP...