One QE Ends, Another Goes Ballistic: Japan Hikes QE and Triples Stock Purchases

We know the Fed Ended QE earlier this week. But almost on cue, Japan’s jumped into the fray, running its printing machine for yet another extension of their Quantitative Easing program.

Having printed money up the wazoo and not seeing any inflation that they richly deserve after 20 years (or so they believe), the Bank of Japan today voted to increase their quantitative easing program by 80 trillion yen ($724 billion) from the current level of 70 trillion yen. The Nikkei stock index was up nearly 5% after the announcement.

The USDJPY trade went all the way to 111 (remember, it was as low as 78 post the last crisis). The weaker yen spurs Japanese Exports.

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Japan’s running at 1% inflation, after considering the sales tax […]

By |October 31st, 2014|Categories: Macro|Tags: , |0 Comments

Macronomics: Why the Fed Taper Has So Little Impact On The US and Indian Bonds

Macronomics

The US Fed finally ended their quantitative easing (QE) program yesterday. The program consisted of the federal reserve printing money to buy a truckload of US Government Bonds and Mortgage Based Securities. This was intended so that the money that was put in the hands of banks who sold these products to the Fed, would have enough to then lend the money out to the economy.

By |October 31st, 2014|Categories: Premium|Tags: |0 Comments

The Fed Ends QE3, But It’s Not Going To Hurt

The US Fed finally ended their quantitative easing (QE) program yesterday. The program consisted of the federal reserve printing money to buy a truckload of US Government Bonds and Mortgage Based Securities. This was intended so that the money that was put in the hands of banks who sold these products to the Fed, would have enough to then lend the money out to the economy.

This program started with $85bn a month of purchases, divided into $45 billion in government bonds and $40 billion in MBS. Additionally, any interest earned or principal repayments (on the MBS) have been reinvested. The QE has been “tapered” down from 2013, going down $10 billion at a time, to reach $15 billion a few months back. Now, it’s been taken off completely.

The impact should have been heavily negative – according to the text books. They’re not printing more money! This should be a disaster!

But it’s not. There […]

By |October 30th, 2014|Categories: Macro|Tags: , , , |0 Comments

The Big Mo Corner: How Banks Create Money, And Why That Matters

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The Big Mo Corner by Mohit Satyanand.

By |October 30th, 2014|Categories: General, Premium|Tags: |0 Comments

Chart: India’s Stock Index Does The Best YTD Performance In The World (Oct 2014)

You could be bullish for India: it’s been doing well. In fact, in 2014, the returns on the index have been ludicrously oversized in comparison. The Nifty is really the only index that has a huge double digit return, among the big guys around the world. The US, even with all it’s new found growth, saw the S&P 500 up only 6% for the year.

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(This is each index, in its own local currency)

And India is the best performer in the BRIC set:

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The 27% return in 2014 puts us right on top of every thing else. […]

By |October 28th, 2014|Categories: ChartOfTheDay|Tags: |0 Comments

Election Fever: Auto, Pharma, IT Stocks Outperform Nifty; Metal, Realty Stocks Underwhelm

The markets have seen quite some euphoria over the last few months. Since May this year, the Nifty has been hitting unprecedented levels, touching an all-time high of 8173.9 at the close of the day of 8th September.

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Ever since Election results came out in May, the markets seem to have taken very kindly to the mandate. The Sensex too saw an all-time high on the same day, hitting 27,354.99.

Since the Nifty is representative of all the industries put together, it would be interesting to see, sector-wise, which industries have seen maximum upswing during this period, and which have under-performed. Some sectors seem to have reacted very positively to the arrival of a new government at the centre, while others have under-whelmed. We do this by comparing the Nifty to other industry-specific indices (e.g. CNX Midcap, CNX Energy, CNX Pharma and so on).

Since we’re interested in the movement of […]

By |October 27th, 2014|Categories: General|Tags: |0 Comments

Happy Diwali 2014! The Annual Prediction Post, and Our Scorecard

Here’s wishing you a very Happy Diwali! Here’s the eighth edition of the Capital Mind Prediction Series, which tells you that it’s darn difficult to predict anything with reasonable success. Which is probably why last year I succumbed to the idiocy of making weasel rules – that is, making just two of three elements of Brilliant but Useless Predictions.

What Happened In The Last Year

Firstly, the markets went nuts. I mean absolutely nuts. The one year return, since last Diwali, on the headline Nifty Index alone, is 27% with the Nifty moving from 6,300 to 8,000. This has been a great year for stocks.

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The Biggest Sector Moves weren’t in the Nifty, really. Smallcaps did the best – over 58% since last Diwali, but Midcaps weren’t […]

By |October 25th, 2014|Categories: Stocks|Tags: |4 Comments

The NSEL-FT Forced Merger Is Not About Piercing Limited Liability. It’s About Fraud.

Too many articles have come out decrying the order by the Government to merge FT and NSEL. They all quote the same thing – FT was just an investor and therefore it should not bear any liability greater than the amount of money they invested into it. It’s against the concept of limited liability. I would have believed this if there was no five letter word “Fraud” involved.

For instance, I think that it’s perfectly fine that Vijay Mallya can spend his personal money while Kingfisher owes lots of money to banks. Because his personal liability is different from that of the company. He is not required to pay back the company’s debt. Of course, he could be, if any of two things happen:

  • If Mallya has fraudulently embezzled Kingfisher funds or conspired with it to fraud someone else, it would not be an overreach to use this information to demand that he pay back such loans […]

By |October 23rd, 2014|Categories: FinanTech|Tags: |6 Comments

QNet Banned From Coffee Day Also

I went to a Coffee Day today and it has the following notice, prominently displayed at the entrance:

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What it says is:

As per instructions received from Economic Offense Wing – Crime Branch, Mumbai

and

Additional Commissioner of Police, Mumbai

Entry is prohibited for representatives, Staff and Employees of:

M/S Vihaan Direct Selling (India) Pvt. Ltd.

M/S QNET Ltd. Hong Kong

M/S Transview Enterprise India Pvt. Ltd.

M/S Vanmala Hotels, Travel and Tourism Services Pvt. Ltd.

By Order,

Cafe Coffee Day….

This is very cool. The MLM scams being perpetrated by the QNet types have been pushed at all sorts of Coffee spots. Mostly, the way they operate is:

  • Call people over to a Coffee day for a meeting to discuss “a business proposition”
  • Hard sell them […]
By |October 23rd, 2014|Categories: Humour, MLM|Tags: |7 Comments

Premium: Happy Diwali, and Our Three Mahurat Stocks

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Capital Mind wishes you and your family a Very Happy Diwali 2014! This is the first Diwali at Capital Mind Premium – we started just after Diwali in November 2013, so it’s almost a year of craziness gone by.

By |October 22nd, 2014|Categories: Premium|Tags: |0 Comments

Financial Technologies to be Merged With NSEL; End of the FT Saga

The government now merges The National Spot Exchange Limited (NSEL) with its parent, Financial Technologies (FT). NSEL has been involved in a mega scam (see Capital Mind’s complete coverage) where it was unable to payout exchange trades. The scam was that the whole thing was supposed to be a commodity exchange, but instead it was used by the exchange and by certain parties to finance themselves, with lay investors buying commodities and selling them immediately back on a forward contract to lock in returns. NSEL is a subsidiary of FT.

The problem came when the government banned the “forward” part of the scheme, which unravelled the whole thing – it turned out that the commodities that people had bought (which were sold back), didn’t even exist. That they didn’t exist was because the stocks were held by the counterparties of these trades i.e. the people who were being financed. THose being financed didn’t have enough cash (or commodities) to […]

By |October 21st, 2014|Categories: FinanTech|Tags: |8 Comments

RBI and Bhalla Slug it out over Inflation and Policy

There’s a fight happening in the intellectual circles around inflation, and you shouldn’t be surprised. It involves the terms “model” and “regression” and stuff that involves figments of people’s imagination, but in the end tries to answer the question most important to the RBI: Should we even bother about RBI when we look at inflation? Is Monetary Policy useful at all?

Before my opinion muddles the issue further, let’s see what happened. In a column titled “Where Monetary Policy is Irrevant” (Indian Express, Sep 13, 2014) Surjit Singh Bhalla wrote about how “Tight monetary policy has as much to do with Indian inflation as it has to do with India’s magnificent loss to England in the recently concluded Test series.”. Essentially, he said, monetary policy doesn’t influence inflation. That RBI raises rates or reduces them has no impact on the very thing it is raised or reduced for, that is, to control inflation.

He “proves” this by using […]

By |October 21st, 2014|Categories: Inflation, RBI|Tags: |2 Comments

From 2015, You’ll Pay Market Prices For LPG Cylinders, and Get Subsidy Into Your Bank Account (No-Aadhaar-Version)

The government will continue the direct subsidy transfer for LPG, but this time it won’t need an Aadhaar card. From 54 districts in mid-November 2014, and for all of India from 1 Jan 2015, we will see the subsidy for LPG being credited directly into bank accounts. The earlier scheme – which was based only on the Aadhaar numbers – has been tweaked to remove the requirement of Aadhaar.

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By |October 20th, 2014|Categories: FuelPrices|Tags: , |0 Comments

Portfolio: We’ve Adding An Oil Stock. And Taking Out One.

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By |October 20th, 2014|Categories: Premium|Tags: |2 Comments