Posted at 12:13 PM , on March 12, 2020
Emergency rate cuts are nothing new for the US Fed. They did it three times in 2001 and another three times during the Lehmann crisis. After a gap of nearly 12 years, Fed again cut rates by 50 bps on Tuesday, March 03, 2020.
The aftermath of the virus
Clearly, the US Fed was worried by the rapid spread of the virus pandemic and also the impact it was already beginning to have on the US economy. Large swathes of the Chinese economy had been virtually shut down impacting the global supply and demand chain. From falling demand for cars and luxury goods to disruption in the supply chain of raw materials; all was happening at a rapid pace. It is to arrest this trend that the Fed opted to cut rates by 50 basis points. This was done at a time when there was a fortnight to the Fed policy.
Posted at 2:20 PM , on June 27, 2016
For any market participant who had seen the Sensex carnage on the day of the BREXIT vote, it would be hard to believe that BREXIT could actually be beneficial for India. While short term negative repercussions cannot be ruled out as an outcome of BREXIT, India will stand to benefit in the longer term. Here are 5 reasons why India will benefit from BREXIT… Continue reading
Posted at 6:44 PM , on September 24, 2015
When the US Fed decided to maintain status quo on rates in September, the standard refrain was that the Fed may choose to put off rate hikes till 2016. Let us first look at the 3 components that the US Fed is closely watching. First is the GDP growth, which has been growing and showing signs of getting closer to the 3.5-4% mark. Secondly, the employment figures are also encouraging with the unemployment rate at a low of 5%, which is as close to full employment as it could be. The only missing variable is inflation which is way below the targeted 2%. The Fed had earlier indicated that it would be ripe for a rate hike only when inflation got back to the 2% mark. With the global crash in oil prices and all other industrial commodities getting cheaper, inflation was never going to reach 2%. If that is what you believe, then we may have to do a rethink…
Posted at 6:12 PM , on September 21, 2015
They should have taken the bull by the horns…
When the US Fed decided to put off a rate hike for the umpteenth time, it hardly came as a surprise. Over the last few quarters, the Fed has been consistently putting off a rate hike due to the highly volatile global market situation. But in reality, the Fed may have actually missed out an opportunity. Let me explain why…
Posted at 7:45 PM , on August 10, 2015
India is becoming a very theme-specific investment story
For the last 7 years since the sub-prime crisis, the Indian market has been a macro play. The markets were driven more by global fund flows and news flows. How the US Fed set interest rates and managed liquidity became important. The crisis in Greece and therefore in Europe, became the staple diet for Indian market analysts. A lot of that could be quietly changing. Within sectors that are stretched, specific companies are making an effort to position themselves differently. And the results are showing in stock prices! But what are these specific themes? Continue reading