Something unprecedented has happened in 2021. There is a great resignation wave at all levels of skills set and nearly every organization is feeling constrained by skills. Skills which are otherwise in demand has greatest shortage, while otherwise mundane skills like waiting tables are also in relatively short supply. Is this a problem or is this an […]
#### (insert your favorite global investment bank’s name) says that Evergrande is not China’s Lehman Moment, screams one headline after another on newswire. In the medium term, it is far far far worse than Lehman. It is a regime change in the approach of China towards credit moral hazard. Last three decades China has built, some say […]
Bitcoin, if considered as a currency, has highly deflationary properties. Many celebrate the deflationary property as a feature. I show here, based on a painstaking data collection, that it is bug. Deflation is a bug for poor countries. Deflation is a bug for poor people. Deflation, at the end of it, is a feature for rich industrialists. […]
Structure of Innovation Many believe that innovators are born, such as some genius like Mozart. However, our experience shows that innovation is an outcome of process and not some magic. In this we should follow the thinking of the most prolific innovator of all times, Thomas Alva Edison, who said “Genius is ninety nine percent perspiration and […]
Recently, Indian GDP for June 2020 Quarter printed -23.9% growth. Interestingly, just a few weeks before this print, RBI MPC announced that it was holding rates steady because CPI inflation was at 6.93%, outside the target range of 2% to 6%. Is it appropriate to hold rates steady, when we have strong degrowth and supply disrupted (and […]
In last three weeks, the major central banks in the world have gone in overdrive to stabilize the markets. Among other things, they are now buying junk bonds, highly rated bonds, MBS, sub-sovereign credits, apart from providing unlimited credit to their sovereigns, and refinancing SME loans. Markets are taking solace from this and are hoping for a […]
As the global economy stares at rapid descent into possibly worst depression ever recorded, US President Trump has been voicing concerns on iatrogenesis of the preventive measure of social distancing on the US economy. To think of iatrogenesis of the preventive measures is unthinkable for many, however it is to useful debate this point, but only in […]
Last Monday I wrote about the issues that ETFs will face due to the disruptions to real economy. I did not expect the problems to surface at the short-end of ETFs and so fast. Last week some of the short duration ETFs had a 30 plus-standard deviation move in one day. A thirty standard deviation move in […]
One measure of funding stress in dollar markets is how much liquidity is demanded by banks from NY Fed. The chart below shows the net liquidity demand / supply amanaged by NY Fed from 7th July 2000 till 17th March 2020. Positive numbers indicate that banks are short of liquidity; while negative numbers indicate that banks have […]
Let me set the tone first by briefly describing the folly of the 2004-09 Great Financial Crisis. It was believed, without stress test, that by combining a seemingly uncorrelated junk grade loans into a pool, some pixie dust magic will convert the pool of such loans into highly coveted low risk investment grade pool. We all know […]