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Commentary

Pandit buys into JM, The US is Not 1999 and More

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Vikram Pandit has bought a 3% stake in JM Financial for $10 million, and they’re applying for a banking license. The group’s financial activities will be ring-fenced by RBI regulation, but a banking license could do wonders. The stock was up 16% to 23.5 on Thursday after a 10% move on Wednesday, and volumes were 18 million shares on the NSE.

Josh Brown says the US is not 1999. While people fear “frothy” valuations, they are hardly overvalued, says Josh. P/E ratios are a comfortable 14 after 1999’s 33, and S&P 500 earnings have doubled. There are nowhere near as close to insane IPOs, there are few speculators and even fewer retail traders. Most of the market is now owned by institutions. This is not like 1999, says Josh. (And I agree. This is different. This is a liquidity led drama and will end badly, but when it ends it might still make a low that’s higher than our current point. Which is why you don’t ignore trends.)

Rahul Khullar, the TRAI boss, on being a tough boss for broadcasters. Media better get prepared for regulation. Already, showing more than 12 minutes of ads per hour is disallowed. Imagine, soon, that media sites will be restricted from displaying more than 3 ads per page and so on. Interesting times.

The Fed Might Taper QE. Or Not. Central banks have gone so far in the attempt to prop up prices by directly buying mortgages or in Japan’s case, ETFs (!) that they now have to soft-plant messages in the media to see how markets will react before they make a real announcement. Gaming sentiment is the only thing key to holding the fort. You can’t fight them, they can print money.

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