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Weekly Newsletter

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Weekly Newsletter | by 2 | on 2021-08-15 03:49

“Value investing is at its core the marriage of a contrarian streak and a calculator.” – Seth Klarman

News you may use

Agriculture sector records new business registration growth at 103% in FY21

Auto Retail Sales Surge 34% in July, but Nowhere Near Pre-Covid Levels – Vehicle registrations rise with the ebbing of 2nd Covid wave and easing of curbs

Buying Foreign Stocks to Get Easier for Indians -NSE, BSE creating platforms at GIFT City for cost-effective investments via LRS

Concerns about kharif sowing persist due to uneven distribution of rainfall, says Crisil

Digital payments continue to grow; significant growth in tier II, III towns

Domestic flyers hit 50L in July, up 61% from June 2021

Economy to return growth by March 2022, banks NPAs to regain normalcy late: Moody’s

Engineering, petrol products, gems drive exports up 50.45% in August first week

Exports up over 50 pc to USD 7.41 bn during August 1-7

Finance Ministry releases Revenue Deficit Grant of Rs 9,871 cr to 17 states

FMCG Survives Second Wave with Little Damage – Sales grow nearly 37% year-on-year in June quarter, but fall 2% sequentially; ecomm share reaches double digits in May: Nielsen

GST compliance: E-way bills made quick and hassle-free

High cost of containers to impact India’s exports: TPCI

In July, more than 65% consumers believe their incomes have reduced: RBI survey

India Inc scales up capex plans post June quarter boost

India to list LIC by current fiscal year end, says govt official

July Inflation at 3-month Low, June IIP up at 13.6% – Inflation now within RBI’s target band of 2-6%, but industrial growth still not at pre-pandemic levels

July Torrent Takes Total SIP Assets Past ₹5-trillion Mark -RECORD INFLOWS of ₹9,608 cr in July driven by retail investors betting on buoyant markets

Nearly 0.7% of GDP spent on R&D, strengthening of S&T infra from 2014-19

NFO Rush Makes July Inflows in Equity MFs Highest in 27 Months -AT ₹ 22,583 CRORE, flows into equity schemes in the month are nearly four times the inflows of ₹5,988 cr in June; new fund offers contribute 40-50% to the net inflows into the plans

Non-life insurers’ premium up 19.46% at Rs 20,000 crore in July

Number of billionaires in India stands at 136 in FY21, 5 less from FY20

RBI to Introduce ‘Regulatory GAAR’ for Round Tripping -Companies, startups and multinationals put their outbound investment, fundraising as well as rejig plans on hold

Rs 6 trillion asset monetisation plan in the offing, says DIPAM secretary

Scrappage Policy will Draw ₹10kcr Investment: PM -Commercial vehicles to be scrapped after 15 years, private ones after 20 years

Sebi Sets up Panel to Bring in T+1 Settlement, Address Concerns -Regulator seeks to boost liquidity, cut risks; Most global markets still follow a T+2 system

Sensex surges 7,700 pts in 7 months to scale 55k peak – FPIs, Retail Investors Pour Funds, Global Cues Give Momentum

Views may be of use
The Dangers of Endless Quantitative Easing
One common factor driving up both stock and bond prices (thus lowering bond yields) could be asset managers’ search for yield, owing to the conditions created by extremely accommodative monetary policies. This would explain why the prices of stocks (including “meme stocks”), bonds, cryptocurrencies, and housing are all a little frothy at the same time.

Truth, Status, and Tribes – The tensions between truth and social cohesion
Bringing this back to status: It’s important to note that, when we’re talking about increasing status, we’re talking in the context of increasing status within a tribe. Everything makes much more sense when we understand that people are hard-wired to choose a tribe, stick within it, and defend it unconditionally.  We’re built for tribes. We can’t live without them. You need people to help you grow food, defend you from enemies, and mate.  Perhaps seeing objective reality was evolutionary fit for solitary humans who didn’t live in tribes since were too busy finding food and shelter to focus on signalling and self-deceiving. But social animals are different. They have to rise up within tribes and avoid freeloaders.

What’s Happening With Gold?
The stability we have observed over the past ten months has a straightforward explanation. An inflation narrative has taken hold with respect to the U.S. economy and U.S. price indices. The conventional wisdom is that the economy is booming because of Biden stimulus payments. Meanwhile, output is constrained by supply chain disruptions and labor shortages, and the Fed is printing trillions of dollars in new money. These three factors will lead to higher wages and too much money chasing too few goods. This will result in both demand-pull inflation (from fiscal stimulus and easy money) and cost-push inflation (from higher wages and output shortages). This toxic combination will cause higher prices and higher interest rates to fight inflation. The higher rates will result in a stronger dollar and lower dollar price for gold. But is the conventional wisdom right?
Source: https://dailyreckoning.com/whats-happening-with-gold/

Marrying Your Equal Is Better Than Marrying Rich
There are two common ways to marry. You can marry your equal or you can marry rich. In my opinion, marrying your equal is better than marrying rich. There’s just something to be said about starting from nothing and getting wealthy together. It’s harder to appreciate sudden wealth, especially if you didn’t earn it.
Source: https://www.financialsamurai.com/marrying-your-equal-is-better-than-marrying-rich/

A World Awash in Capital
The one concept that caught my attention in many conversations was simply the sheer volume of Capital sloshing around. Not just on the deck off of the dining room, or even the US system, but throughout the entire global financial system. The world is awash in capital, in so much cash, that it is a little difficult to comprehend. Not only are equities priced higher, but every asset class you can think of is being driven up as faithful money seeks a dry, safe and happy home.
Source: https://ritholtz.com/2021/08/so-much-cash/https://ritholtz.com/2021/08/so-much-cash/

How to survive a black swan event: Cash is the only thing
The Covid shock has been extraordinary in so many ways. It clearly has been the most severe shock to the revenues of companies in almost all sectors and can truly be called a black swan event. Especially in the leisure and retail sectors, companies had to cope with revenue declines of 30% or more and struggled to survive. Thank goodness, government and central banks acted swiftly and decisively to help many of these companies survive.
Source: https://klementoninvesting.substack.com/p/how-to-survive-a-black-swan-event

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