Do it yourself

Global Economics Intelligence executive summary, October 2023 (McKinsey & Co) The global outlook is unchanged despite weaker readings in trade, consumer confidence, and business activity. Still-elevated inflation and interest rates are acting as headwinds to economic growth. According to the International Monetary Fund’s (IMF) October World Economic Outlook, global growth is forecast to slow from 3.5% in 2022 to 3.0% in 2023 and 2.9% in 2024 (Exhibit 1). This is similar to April’s report, which forecasted global growth of 2.8% in 2023 and 3.0% in 2024. Furthermore, the October report states that, although the likelihood of a hard landing has decreased over the past six months, China’s property sector crisis could deepen. Near-term inflation expectations have increased and, in turn, could contribute to the persistence of core inflation pressures. Furthermore, more than half of low-income developing countries are in or at high risk of debt distress. The Conference Board shows tha...

Seven reasons to expect faster disinflation (Nomura Securities) ... driven by softer momentum and not just base effects. Most Asian central banks are now on a pause, and the window to easing should open up later this year. By mid-2023, we expect inflation momentum (m-o-m, seasonally adjusted) to be closer to central bank targets in most economies. This means most Asian central banks are now in a policy pause phase and, if underlying inflation moderates durably, as we expect, the window to easing would open up later in 2023. #1. Asia’s inflation is driven more by supply than demand-side factors Asia’s inflation differs from inflation in the US/Europe, as it is more supply-side driven, and these drivers are gradually abating. Oil prices are around one-third lower than almost a year ago. FAO food prices have fallen for eleven consecutive months, and this has historically transmitted to Asia’s food inflation with a lag of around six months. Pandemic-driven supply-chain disruptions...

The investors are finding themselves standing at a crossroad again. For seasoned investors this is nothing new, but for a large proportion of investors who have started their investment journey in the past 5 years, this is something new. At this juncture everyone has to choose a path for onward journey. The options are rather simple – (i)    Continue the journey in the north direction - Stay with the extant strategy and hold on to your investments. (ii)   Take a right turn towards the East - Review and restructure your portfolio of investments in light of the new evidence. (iii)  Take a left turn towards the west – Change the strategy and rebalance the portfolio in favor of Safety and Liquidity from Return previously. (iv)   Turn around and move back in the south direction - Liquidate the whole or a substantial part of your portfolio and wait for an opportune time to begin the journey afresh. The empirical evidence suggests that the vi...

 I remind myself of this narration almost every market cycle. I think, it is the time to reiterate once again. Have you ever been to vegetable market after 9:30PM? The market at 9:30PM is very different from the market at 5:30PM. At 5:30PM, the market is less crowded. The produce being sold is good and fresh. The customer has larger variety to choose from. The customer is also at a liberty to choose the best from the available stock. The vendors are patient and polite, and willing to negotiate the prices. As the day progresses, the crowd increases. The best of the stuff is already sold. Prices begin to come down slowly. The vendors now become little impatient and less polite and mostly in "take it or leave it" mode. By 9:30PM, most of the stuff is already sold, and only inferior quality residue is left. The vendors are in a hurry to wind up the shops and go back home. The prices are slashed. There is big discount on buying large quantities. Vendors are aggressive and ve...