Do it yourself

The rivalry between the United States and China is often described as a new Cold War. While the comparison is tempting, it is also misleading. The Cold War (US vs USSR) was characterized by ideological separation (Communism vs free market), minimal economic interaction, and rigid alliances (NATO vs Warsaw). Present conditions are materially different. The US and China are deeply economically intertwined. Trade volumes are substantial. Supply chains are integrated. Financial markets are linked. Neither side can afford full disengagement without significant self-inflicted damage. What is happening instead is selective rivalry to gain advantage in the terms of trade and control over resources. Both countries are focusing on the sectors they consider strategically sensitive, e.g., advanced technology, defense-related manufacturing, data infrastructure, and critical resources. In these areas, they are adopting a policy of control rather than cooperation. In other sectors, pragmatic engageme...

The global markets are shaken by the trade war initiated by the US by announcing arbitrary unilateral tariffs on all of its trade partners. Some large trade partners of the US, like China and EU, have reportedly threatened to join the war with full vigor, making the global market extremely jittery. The prices of most risky assets and commodities have corrected sharply due to fear of widespread economic repercussions resulting in a global recession or even a depression like condition. The benchmark indices in most developed countries have corrected 8% to 18% in the past one month. Commodities, especially metals and energy, have also seen 7%-15% cut. In my view, it may be a little early to assess the short-term impact of the latest events. Things are evolving fast and chances are that better sense would prevail and leaderships of the US and its trade partners would be able to prevent the current stalemate from becoming a game of ego between them; and arrive at a mutually agreed solut...

  The fourth letter of the English Alphabet “D” has held a prominent position in financial market jargon, at least since the Great Depression in the late 1920s. In the past two decades the terms like Dematerialization, Demographics, Depression, Decoupling, Demonetization, De-Dollarization, Digitalization, Deflation etc., have attracted immense interest from the market participants. Some of these “Ds” have had significant impact on the global economy; while the others have been mostly limited to being topics of interesting discussions and statistical analysis. In the current Indian context specifically, I find three “Ds”, viz., Digitalization, Deflation and Demographics most relevant for the economy and therefore markets. The current global situation – investment mix, geopolitics, global trade and gradual shift in strategic power – implies that supply shocks could be more frequent and much more intense in the next decade or so at least. ·        ...