SlideShare uma empresa Scribd logo
1 de 56
Economy & Market Review

      November 15, 2008
A Snapshot of Global Economy
World economy to slow down considerably




 Source: International Monetary Fund, World Economic Outlook November 2008
 Note: Annual percentage changes in GDP for 2008 and 2009 are IMF estimated numbers

 After recording strong growth for four years, global economy is heading towards a downturn led by advanced
 economies. IMF has estimated a World GDP growth of 3.7% for 2008 and 2.2% for 2009.
US economy weakening…




Source: Bureau of Economic Analysis, United States
Note: Percentage changes in GDP are over the corresponding period in the previous year. Q3-2008 numbers are preliminary estimates

Experts including Federal Reserve Chairman Mr. Ben Bernanke now believe that the weakness in the US economy
may continue through 2009. A U-shaped recovery seems to be the most likely scenario.
…and so are other developed economies




   Source: IMF World Economic Outlook November 2008
   Note: GDP growth is over the previous year. Growth for 2008 and 2009 are IMF projections

With credit crisis spreading to Europe and Japan, those economies may also suffer a setback in terms of GDP
growth. IMF forecasts that almost all advanced economies may now go into a recession.
Emerging Economies shall also slowdown




 Source: IMF World Economic Outlook November 2008
 Note: GDP growth is over the previous year. Growth for 2008 and 2009 are IMF projections


Economic growth in emerging economies shall also slow down as per IMF estimates. IMF in its November 2008
outlook has projected India’s real GDP growth to come down to 6.3 percent in 2009.
Home Prices in US continue their decline




  Source: Standard & Poor’s
  Note: Composite CSXR is a composite index of the home price index for the top 10 Metropolitan Statistical Area's in the United
  States . S&P Case-Shiller Composite 20 is a value-weighted average of 20 metro area indices.

The S&P Case-Shiller Indices have corrected by approximately 20% from their peaks in June-July 2006. The home
prices continue to correct as there is an oversupply situation in residential market in US.
Falling Home Prices, Rising Foreclosures in US




  Source: Foreclosure Filings are from RealtyTrac, US. Case-Shiller Index values are from Standard & Poor’s
  Note: S&P Case-Shiller Composite 20 is a value-weighted average of 20 metro area indices


As the home prices started falling and mortgage rates resetted at higher levels, the interest burden on home-
owners increased. The sub-prime borrowers failed to refinance their loans and hence foreclosed their mortgages.
Rising Unemployment in US is hurting Consumption




Source: Bureau of Labor Statistics, United States
Note: The unemployment data is seasonally adjusted


Rapid rise in unemployment in US is bothering both Fed and the President-elect Barack Obama. Mr. Bernanke in
his several testimonies has quoted that unemployment scenario is going to get worse before it gets better.
Tale of “The Crisis” using CBOE VIX




Source: Internal Research
Tale of “The Crisis” using CBOE VIX

I.
     Fannie Mae/Freddie Mac placed into a conservatorship run by the Federal Housing Finance Agency (FHFA)

     Bank of America announces plans to acquire Merrill Lynch. Lehman Brothers files for Chapter 11 protection,
     marking the largest bankruptcy in US history.

     American International Group (AIG) scrambles for capital after rating downgrades. Federal Reserve announces
     creation of credit facility of up to $85 billion for AIG.

     Goldman Sachs and Morgan Stanley become bank holding companies. NY Fed immediately provides access of
     bank’s broker dealer arms to Fed’s Primary Dealer Credit facility.

     JP Morgan Chase announces plans to acquire Washington Mutual.

     House of Representatives reject the US$ 700 billion bailout plan (asset purchase legislation).

     Citigroup announces plans to acquire Wachovia’s banking operations for US$ 1/share. Wells Fargo enters the
     fray and raises the bid to US$ 7/share.

     Sub-prime crisis spreads to Europe - HBOS, Hypo Real Estate and Fortis fail. HBOS acquired by Llyods TSB,
     Hypo Real Estate rescued by German government and Fortis is nationalized before being acquired by BNP
     Paribas.
Tale of “The Crisis” using CBOE VIX

I.
     US Senate and House of Representatives approve Troubled Assets Repurchase Program (TARP). The legislation is
     called Emergency Economic Stabilization Act of 2008.

     G-7 meeting results into a slew of measures being taken by the Central banks across the world. Fed authorizes swap
     lines of unlimited extent with BoE, ECB, SNB and BoJ to ensure sufficient dollar supply.

     Coordinated rate cuts by central banks. Fed, ECB, BoE, Sweden, Canada, Switzerland cut their benchmark rates by
     50 bps, Chinese central bank by 27 bps and Australian central bank by 100 bps.

     After Ireland guarantees all its deposits, Germany, Denmark, Austria announced that they will also protect their
     savers and guarantee deposits. Many governments announce a guarantee on the interbank deposits and new debt.

     Fed announces to buy commercial paper directly from the corporates to keep the credit growth buoyant.

     Several emerging economies including Pakistan, Belarus, Hungary etc. having high current account deficits
     approach IMF for assistance.

     South Korea announces a package of US$ 130 billion to guarantee foreign exchange debt.

     Federal Reserve cuts the target rate by 50 bps to 1%. Bank of England cuts its benchmark rate by 150 bps to 3%
     while ECB cuts its rates by 50 bps.

     China announces an economic stimulus package of US$ 586 billion to be spent on Infrastructure till 2010.
It’s a Crisis of Confidence more than anything else




 Source: US Federal Reserve


The yield of three-month US Treasury Bill almost dropped to zero after Lehman Brothers filed for bankruptcy. The
crisis has resulted in huge money shifting into US Treasury thus driving the yields to an all-time low.
LIBOR shooting up signifies risk aversion




  Source: British Bankers Association
  Note: These are US dollar LIBOR rates

The credit crisis has led to a liquidity squeeze. Financial Institutions are not lending to each other because of the
fear of default by the counterparty. This has led to the LIBOR shooting to decade-high levels.
Corporate bond spreads in US have shot to all-time highs




   Source: US Federal Reserve

The corporate bond spreads (both AAA and BAA with 10-year US Treasury) have shot up significantly in the last 8-
10 months. The average spread of AAA in the last 55 years has been 77 bps (as compared to 196 bps at end-
September 2008) while that of BAA has been 173 bps (as compared to 362 bps at end-September 2008).
Sub-prime related losses




   Source: Financial Times, October 1, 2008.
   Note: The data is collated and updated by Bloomberg till September 30, 2008.


The total sub-prime losses/write-downs estimated by Bloomberg as on September 30, 2008 stand at US$ 586 billion.
Experts believe the losses could top US$ 1 trillion going forward.
The Casualties
Global Inflation




  Source: International Monetary Fund World Economic Outlook, October 2008

Relentless rise in crude and commodity prices through 2007 and in the first half of 2008 made stagflation a potential
threat. With expectations of a global economic slowdown firming up, commodity prices have corrected to factor in
the demand destruction that may happen because of lower growth. Economists argue that global economy may get
into a stag deflation kind of a period in the short to medium term.
Coordinated efforts by Central Banks




Note: Federal Reserve funds rate, Bank of England bank rate, ECB target refinancing rate, Bank of Japan Target rate and People’s
Bank of China one-year lending rate

Central banks across the globe have responded to the crisis in a coordinated fashion and cut their benchmark rates.
They are also pumping money into the system, capitalizing their banks and guaranteeing deposits.
A Snapshot of Indian Economy
Indian GDP growth shall moderate




Source: Central Statistical Organization, National Accounts

India’s real GDP growth is set to moderate in 2008-09. The Prime Minister’s Economic Advisory Council has
forecasted a growth of 7.7 percent for this fiscal. Various estimates put the growth between 7-8 percent.
High Inflation…




Source: Office of Economic Advisor
Note: 2008-09 weekly averages till week ending October 25, 2008. Inflation over the corresponding period last year

 From the peak of 12.63%, Inflation in India has moderated to 8.98% for the week ending November 1, 2008.
 Good monsoon and sharp correction in global commodity prices have brought down the inflation expectations.
…forced RBI to tighten the monetary policy




Source: Reserve Bank of India


RBI remained extremely hawkish on Inflation till August 2008. However, as the prices of commodities came off
their highs and global liquidity situation deteriorated, RBI in the month of October aggressively cut CRR and Repo
rate. On November 1, a lot of other monetary measures including reduction of SLR were announced.
…which has adversely impacted the Industrial growth




Source: Central Statistical Organization, India

Monthly IIP growth has remained extremely volatile during this calendar year. However, there is no denial that IIP
is in a clear downtrend. Now that IIP is falling, experts including Finance Minister have raised concerns on the
constituents of IIP and their weights in the Index.
Trade deficit is at a record high…




Source: Department of Commerce, Government of India
Note: Data for 2008-09 is for April – September while that of 2007-08 is provisional

As India imports two-thirds of its crude requirement, the trade deficit for the first half is already 75% of the full-
year trade deficit of 2007-08. Sharp and rapid rupee depreciation has also hurt the importers in the recent months.
…and fiscal position is also deteriorating

                         6.5
                                                          Estimated Fiscal deficit (incl. off-budget liabilities)
                                                                                                                             6.2
                         6.0                              Fiscal deficit excl off-budget liabilities
                                                          Budget estimate
                                5.9
                         5.5
fiscal deficit/GDP (%)




                         5.0

                         4.5
                                           4.5
                         4.0

                                                                                    4.1
                                                               4
                         3.5
                                                                                                                             3.2
                         3.0
                                                                                             3.4
                                                                                                              3.2
                                                                                                                             2.5
                         2.5

                         2.0
                               2002-03    2003-04            2004-05            2005-06      2006-07        2007-08RE   2008-09F
         Source: CRISIL Research
         Note: The major off-budget liabilities are fertilizer and oil subsidies.

The subsidies provided to oil marketing and fertilizer companies can blow up the fiscal deficit number. Besides, the 6th
pay commission increases and a potential slowdown in direct and indirect taxes may also worsen the fiscal situation.
Balance of Payments Situation doesn’t look good either


                                       Current account balances have
                                       deteriorated in this fiscal mainly
                                       because of rising trade deficit.
                                       On the other hand, capital is
                                       hard to come by because of the
                                       global liquidity crunch.


                                       Foreign Institutional Investors
                                       who brought over US$ 17
                                       billion in calendar 2007, have
                                       pulled out over US$ 13 billion in
                                       this calendar year till October.
                                       FDI flows have been robust and
                                       that gives some solace.


                                       Source: Reserve Bank of India, SEBI
                                       and Department of Commerce, India
Foreign Exchange Reserves though substantial have depleted



                                         Foreign Exchange Reserves
                                         have depleted at a rapid rate this
                                         fiscal. Forex reserves have lost
                                         over US$ 50 billion primarily
                                         due to euro-dollar movements
                                         and RBI selling dollars in the
                                         currency market to support the
                                         Rupee.


                                         RBI is seen supporting Rupee
                                         near 49-50 levels as sharp
                                         depreciation of INR hurts
                                         importers.



                                         Source: Reserve Bank of India,
Tight Liquidity Conditions led to monetary easing




      Source: Reserve Bank of India

The liquidity in the Indian financial system became extremely tight in late September and early October, a
phenomenon observed across the globe. RBI acted swiftly and cut CRR and Repo rate and opened new LAF
windows for mutual funds and NBFC who were under tremendous pressure due to inadequate liquidity.
Credit & Money Supply growth remain above RBI targets




Source: Reserve Bank of India

RBI in its mid-term review has stated that credit growth was at 29.4% on a y-o-y basis upto October 10, 2008
compared to 23.1% a year ago. Similarly, the money supply growth of 20.3% is also above the RBI target of 17%
Private Final Consumption Expenditure




Source: Economic Survey 2007-08

India’s domestic consumption as a percentage of GDP is quite high which is comforting. That said, a slowdown in
consumption demand cannot be denied with job market becoming weak and disposable incomes not growing the
way that have been in the last few years.
Gross Domestic Capital Formation (Investments)


                                      Investments have become an
                                      engine of growth in the past five
                                      years.    However,     as     the
                                      economic growth gets into 7%
                                      zone, Investment from the
                                      private sector may come down
                                      in the short to medium term.


                                      We have witnessed robust FDI
                                      inflows during the last six
                                      months that indicate that as and
                                      when the financial crisis gets
                                      over, India can get on to that
                                      high growth trajectory


                                      Source: Economic Survey 2007-08
Gross Domestic Savings


                         Savings will remain the mainstay
                         of Indian economy. With
                         current savings rate hovering
                         around that 35% mark, RBI
                         projections say that Gross
                         Domestic Savings may actually
                         reach 36% of GDP by the end
                         of 11th five year plan.

                         Source: Economic Survey 2007-08




                         Source: Reserve Bank of India
Demographic Dividend                            (Working population 15-64 years)




Source: United Nations

A population bulge in the working age group (15-64 years) is seen as an inevitable advantage characterized as a
quot;demographic dividendquot;. India is, & will remain the youngest economy till 2050 with a median age of 38.6 years, as
compared to China with 45 years & Japan with 54.9 years.
Overview of Equity Markets
Returns of major world indices




       Source: MFI Explorer
       Note: All Ordinaries – Australia; Dow Jones and Nasdaq – US; FTSE – UK; CAC 40 – France; DAX –
       Germany; Strait Times – Singapore; Hang Seng – Hong Kong; RTS – Russia; SSE Composite – China;
       Bovespa Sao Paulo – Brazil; Kospi – South Korea; Nikkei – Japan


Equity markets across the world have registered huge losses in 2008. The primary reason is the flight of capital from
riskier assets to safer assets like Treasury and sovereign bonds.
Returns of major world indices




       Source: MFI Explorer
       Note: All Ordinaries – Australia; Dow Jones and Nasdaq – US; FTSE – UK; CAC 40 – France; DAX – Germany;
       Strait Times – Singapore; Hang Seng – Hong Kong; RTS – Russia; SSE Composite – China; Bovespa Sao Paulo –
       Brazil; Kospi – South Korea; Nikkei – Japan

Majority of the benchmark equity indices are giving negative returns on a 3-year basis. Sensex has however
performed quite well over its peers on a 3-year period.
Indian Equity Markets – Sectoral Indices performance




 Source: MFI Explorer

BSE Realty Index has lost close to 85% of its value in 2008. The Real estate sector is under severe strain due to
high interest rates and reduced affordability because of high prices. BSE Metal which is the second worst
performer has lost most of its value since August 2008 after the commodity bubble burst.
Unprecedented volatility in Equity markets




 Source: National Stock Exchange, India

Unprecedented volatility has been observed in the global equity markets in the last two months and India is not
different in that regard. India VIX, which is a measure of market’s expectation of volatility over the near-term has
almost gone up 100% since its inception on November 1, 2007.
Fund flows in Indian equity market




Source: Securities and Exchange Board of India

FIIs have been in the thick of action during the last few years. A lot of capital was brought in by the FIIs which
took the Sensex to 21,000 in January 2008. Since then, it has been a trend reversal. Although Mutual funds have
bought equities, but their scale is much less as compared to foreign investors.
Equity market volumes have dipped




Source: National Stock Exchange of India

Market volumes have thinned considerably during the last 7-8 months, a clear sign of risk aversion prevailing in
the market. Total cash & F&O volumes have dipped by as much as 44% from October 2007 to October 2008.
Corporate Performance showing first signs of strain




Source: Capital Line

The growth in EBITDA and PAT has come down sharply from its highs. The top-line growth has also started
moderating from Q2-FY09 and as slowdown becomes more pronounced, revenues will be adversely impacted.
Margins remain under pressure




Source: Capital Line

Margins both EBITDA and PAT have depressed in the last three quarters on the back of higher input costs. The
recent drop in commodity prices shall come into effect from Q3-FY09 but this time around realization from sales
may also come down.
Overview of Fixed Income Markets
Wholesale Debt Market trends


                               The debt market capitalization
                               has consistently increased over
                               the past years. Corporate debt
                               market however, continues to
                               remain very shallow. The
                               Government debt market still
                               forms 88% of the market
                               turnover.

                               FII debt investment limits in
                               corporate bonds were raised
                               recently from US$ 3 billion to
                               US$ 6 billion, which was availed
                               instantaneously. SEBI has also
                               proposed a lot of reforms for
                               the Indian corporate bond
                               market.


                               Source: National Stock Exchange, India
10-year bond yields




Source: Reuters and Office of Economic Advisor, India

Yields of the 10-year Government paper moved up to as high as 9.4% before coming down below 8% as
inflation expectations cooled off. The yields went below 7.5% after the inflation data for week ending November
1, 2008 came at 8.98%
Corporate bond spreads have gone up




Source: Reuters

Corporate bond spreads have risen in the past few months mirroring the global trend. The 5-year AAA corporate
bond spread rose to as much as 400 basis points.
Fixed Deposit Rates have gone up




Source: Reserve Bank of India
Dollar has gained against majority of the currencies




Source: Federal Reserve, United States

Dollar has appreciated sharply against Euro and other major currencies since mid-July 2008. Yen is the only currency
that has gained against dollar. Analysts believe that this phenomenon has got to do with the reversal of yen carry
trade that prevailed for several years.
Overview of Commodity Markets
Crude Oil now below US$ 60/barrel




Source: Reuters and Federal Reserve, United States

Crude oil has now corrected by over 60% from its peak in July 2008. The primary reason for the oil price correction
is the expectation of demand destruction that may happen in the forthcoming years of global slowdown. Besides, US
dollar has appreciated notably against Euro in the past few months.
Gold




Source: www.gold.org and Federal Reserve, United States

Considered to be a safe haven, investors shifted their money to Gold leading to its prices breaching the US$
1000/ounce mark for the first time. However, gold has corrected in line with other commodities in the past one
month as US dollar continues to appreciate against major currencies.
Copper




Source: London Metal Exchange


Copper prices also corrected by around 60% after getting hit by the concerns of lower demand going forward.
Tin and Nickel




Source: London Metal Exchange
Aluminum Alloy, Zinc and Lead




Source: London Metal Exchange
Outlook

  The advanced economies led by US are likely to have a negative GDP growth for the next few
  quarters on the back of slowing private consumption. There is a growing consensus that economic
  recovery in these economies would be U-shaped at best and L-shaped at worst.

  Emerging economies including India and China shall also have spillover effects of this slowdown in
  advanced economies. Various international agencies and rating companies have already put a watch
  on India and downgraded its growth forecast for 2009 and 2010.

  As we run a high fiscal deficit, we don’t have any headroom for an economic stimulus package like
  China. Hence, an economic slowdown can affect the job market adversely, which in turn can impact
  consumption demand.

  On the domestic front, Q3 corporate results could come as a negative surprise to markets. General
  elections mid-next year and the resulting government shall be instrumental in giving markets some
  direction.

  We expect markets to remain range-bound and quite volatile at least for the next six months. It will
  continue taking cues from the global markets and price in the negative news coming in from all
  quarters.

  Even if we revise down the earnings of Sensex companies, the Sensex currently trades at around 9-
  10 times Price-Earnings multiple on FY09 earnings estimates. If we take the inherent value in some
  stocks into account, this multiple comes down further.

Mais conteúdo relacionado

Mais procurados

The triple transformation achieving a sustainable business model
The triple transformation achieving a sustainable business modelThe triple transformation achieving a sustainable business model
The triple transformation achieving a sustainable business modelIwan Suryadi
 
Highlights of recent trends in financial markets
Highlights of recent trends in financial marketsHighlights of recent trends in financial markets
Highlights of recent trends in financial marketsRajendar Madasi
 
Imf world economic outlook, october 2020
Imf world economic outlook, october 2020Imf world economic outlook, october 2020
Imf world economic outlook, october 2020RepublikaDigital
 
Cash Management & Fixed Income in a Low-rate Environment
Cash Management & Fixed Income in a Low-rate EnvironmentCash Management & Fixed Income in a Low-rate Environment
Cash Management & Fixed Income in a Low-rate EnvironmentCapital International Group
 
Investment Edge Q4 2010
Investment Edge Q4 2010Investment Edge Q4 2010
Investment Edge Q4 2010simonkbowen
 
Investor spring 2012
Investor spring 2012Investor spring 2012
Investor spring 2012KateOD
 
Global economy in charts - Q2 2019
Global economy in charts - Q2 2019Global economy in charts - Q2 2019
Global economy in charts - Q2 2019Deloitte UK
 
Global economy in charts - Q3 2019
Global economy in charts - Q3 2019Global economy in charts - Q3 2019
Global economy in charts - Q3 2019Deloitte UK
 
Client Alert: Brexit - The Impact on Cost of Capital
Client Alert: Brexit - The Impact on Cost of CapitalClient Alert: Brexit - The Impact on Cost of Capital
Client Alert: Brexit - The Impact on Cost of CapitalDuff & Phelps
 
Quarterly reports - WIOF Global Listed Utilities Fund
Quarterly reports - WIOF Global Listed Utilities FundQuarterly reports - WIOF Global Listed Utilities Fund
Quarterly reports - WIOF Global Listed Utilities FundKen Teale
 
TFJ: The Fed Gets Aggressive
TFJ: The Fed Gets AggressiveTFJ: The Fed Gets Aggressive
TFJ: The Fed Gets AggressiveJoe Morgan
 
(CEFAM) FIN 230 - Portfolio Presentation
(CEFAM) FIN 230 - Portfolio Presentation(CEFAM) FIN 230 - Portfolio Presentation
(CEFAM) FIN 230 - Portfolio PresentationAlexisCuny2010
 
Weekly markets perspectives 12 nov2012
Weekly markets perspectives 12 nov2012Weekly markets perspectives 12 nov2012
Weekly markets perspectives 12 nov2012Fincor Corretora
 

Mais procurados (20)

The triple transformation achieving a sustainable business model
The triple transformation achieving a sustainable business modelThe triple transformation achieving a sustainable business model
The triple transformation achieving a sustainable business model
 
Highlights of recent trends in financial markets
Highlights of recent trends in financial marketsHighlights of recent trends in financial markets
Highlights of recent trends in financial markets
 
Key Findings: The Future of Corporate Governance in Capital Markets Following...
Key Findings: The Future of Corporate Governance in Capital Markets Following...Key Findings: The Future of Corporate Governance in Capital Markets Following...
Key Findings: The Future of Corporate Governance in Capital Markets Following...
 
OECD Investment Policy Review of Georgia: Key Findings
OECD Investment Policy Review of Georgia: Key FindingsOECD Investment Policy Review of Georgia: Key Findings
OECD Investment Policy Review of Georgia: Key Findings
 
Imf world economic outlook, october 2020
Imf world economic outlook, october 2020Imf world economic outlook, october 2020
Imf world economic outlook, october 2020
 
OECD Sovereign Borrowing Outlook 2017 - Key Findings
OECD Sovereign Borrowing Outlook 2017 - Key FindingsOECD Sovereign Borrowing Outlook 2017 - Key Findings
OECD Sovereign Borrowing Outlook 2017 - Key Findings
 
Corporate Bond Market Trends, Emerging Risks and Monetary Policy 2020
Corporate Bond Market Trends, Emerging Risks and Monetary Policy 2020Corporate Bond Market Trends, Emerging Risks and Monetary Policy 2020
Corporate Bond Market Trends, Emerging Risks and Monetary Policy 2020
 
OECD Capital Market Review of Croatia 2021
OECD Capital Market Review of Croatia 2021OECD Capital Market Review of Croatia 2021
OECD Capital Market Review of Croatia 2021
 
2017 OECD Business and Finance Outlook Key Findings
2017 OECD Business and Finance Outlook Key Findings2017 OECD Business and Finance Outlook Key Findings
2017 OECD Business and Finance Outlook Key Findings
 
Cash Management & Fixed Income in a Low-rate Environment
Cash Management & Fixed Income in a Low-rate EnvironmentCash Management & Fixed Income in a Low-rate Environment
Cash Management & Fixed Income in a Low-rate Environment
 
Investment Edge Q4 2010
Investment Edge Q4 2010Investment Edge Q4 2010
Investment Edge Q4 2010
 
MTBiz September 2014
MTBiz September 2014MTBiz September 2014
MTBiz September 2014
 
Investor spring 2012
Investor spring 2012Investor spring 2012
Investor spring 2012
 
Global economy in charts - Q2 2019
Global economy in charts - Q2 2019Global economy in charts - Q2 2019
Global economy in charts - Q2 2019
 
Global economy in charts - Q3 2019
Global economy in charts - Q3 2019Global economy in charts - Q3 2019
Global economy in charts - Q3 2019
 
Client Alert: Brexit - The Impact on Cost of Capital
Client Alert: Brexit - The Impact on Cost of CapitalClient Alert: Brexit - The Impact on Cost of Capital
Client Alert: Brexit - The Impact on Cost of Capital
 
Quarterly reports - WIOF Global Listed Utilities Fund
Quarterly reports - WIOF Global Listed Utilities FundQuarterly reports - WIOF Global Listed Utilities Fund
Quarterly reports - WIOF Global Listed Utilities Fund
 
TFJ: The Fed Gets Aggressive
TFJ: The Fed Gets AggressiveTFJ: The Fed Gets Aggressive
TFJ: The Fed Gets Aggressive
 
(CEFAM) FIN 230 - Portfolio Presentation
(CEFAM) FIN 230 - Portfolio Presentation(CEFAM) FIN 230 - Portfolio Presentation
(CEFAM) FIN 230 - Portfolio Presentation
 
Weekly markets perspectives 12 nov2012
Weekly markets perspectives 12 nov2012Weekly markets perspectives 12 nov2012
Weekly markets perspectives 12 nov2012
 

Destaque

The Socio-Economic Roots of Poverty (gilpp_2013)
The Socio-Economic Roots of Poverty (gilpp_2013)The Socio-Economic Roots of Poverty (gilpp_2013)
The Socio-Economic Roots of Poverty (gilpp_2013)Prabhu Guptara
 
Economics cp chapter 13 power point
Economics cp   chapter 13 power pointEconomics cp   chapter 13 power point
Economics cp chapter 13 power pointDina Heffner
 
Poverty and Unemployment
Poverty and UnemploymentPoverty and Unemployment
Poverty and UnemploymentRajath Kiran B
 
Poverty and unemployment in india by Abhishek Lahiry
Poverty and unemployment in india by Abhishek LahiryPoverty and unemployment in india by Abhishek Lahiry
Poverty and unemployment in india by Abhishek Lahiryabhisheklahiry
 
Concept of National Income with GDP GNP NNP& NDP
Concept of National Income with GDP GNP NNP& NDPConcept of National Income with GDP GNP NNP& NDP
Concept of National Income with GDP GNP NNP& NDPAnkit Singh
 
NATIONAL INCOME====by sumit mukherjee
NATIONAL INCOME====by sumit mukherjeeNATIONAL INCOME====by sumit mukherjee
NATIONAL INCOME====by sumit mukherjeesumit mukherjee
 
Managerial Economics Market Structures PPT
Managerial Economics Market Structures PPTManagerial Economics Market Structures PPT
Managerial Economics Market Structures PPTDr. Durgaprasad Navulla
 
Balance of payments
Balance of paymentsBalance of payments
Balance of paymentsnamanjain221
 
perfect competition, monopoly, monopolistic and oligopoly
perfect competition, monopoly, monopolistic and oligopolyperfect competition, monopoly, monopolistic and oligopoly
perfect competition, monopoly, monopolistic and oligopolysandypkapoor
 
Market Structure and Types of Market Structure
Market Structure and Types of Market StructureMarket Structure and Types of Market Structure
Market Structure and Types of Market StructureMithilesh Trivedi
 
Market Structure- Micro Economics
Market Structure- Micro EconomicsMarket Structure- Micro Economics
Market Structure- Micro EconomicsZoha Qureshi
 

Destaque (20)

Final macro eco
Final macro ecoFinal macro eco
Final macro eco
 
National income
National incomeNational income
National income
 
The Socio-Economic Roots of Poverty (gilpp_2013)
The Socio-Economic Roots of Poverty (gilpp_2013)The Socio-Economic Roots of Poverty (gilpp_2013)
The Socio-Economic Roots of Poverty (gilpp_2013)
 
Economics cp chapter 13 power point
Economics cp   chapter 13 power pointEconomics cp   chapter 13 power point
Economics cp chapter 13 power point
 
Poverty
PovertyPoverty
Poverty
 
Poverty and Unemployment
Poverty and UnemploymentPoverty and Unemployment
Poverty and Unemployment
 
Presentation on poverty__unemployment_and_education_Nepal
Presentation on poverty__unemployment_and_education_NepalPresentation on poverty__unemployment_and_education_Nepal
Presentation on poverty__unemployment_and_education_Nepal
 
Poverty and unemployment in india by Abhishek Lahiry
Poverty and unemployment in india by Abhishek LahiryPoverty and unemployment in india by Abhishek Lahiry
Poverty and unemployment in india by Abhishek Lahiry
 
Concept of National Income with GDP GNP NNP& NDP
Concept of National Income with GDP GNP NNP& NDPConcept of National Income with GDP GNP NNP& NDP
Concept of National Income with GDP GNP NNP& NDP
 
Balance of payment
Balance of paymentBalance of payment
Balance of payment
 
NATIONAL INCOME====by sumit mukherjee
NATIONAL INCOME====by sumit mukherjeeNATIONAL INCOME====by sumit mukherjee
NATIONAL INCOME====by sumit mukherjee
 
Economic Planning In India
Economic Planning In IndiaEconomic Planning In India
Economic Planning In India
 
Managerial Economics Market Structures PPT
Managerial Economics Market Structures PPTManagerial Economics Market Structures PPT
Managerial Economics Market Structures PPT
 
Business cycles
Business cyclesBusiness cycles
Business cycles
 
Balance of payments
Balance of paymentsBalance of payments
Balance of payments
 
Balance of payments
Balance of paymentsBalance of payments
Balance of payments
 
BALANCE OF PAYMENT
BALANCE OF PAYMENTBALANCE OF PAYMENT
BALANCE OF PAYMENT
 
perfect competition, monopoly, monopolistic and oligopoly
perfect competition, monopoly, monopolistic and oligopolyperfect competition, monopoly, monopolistic and oligopoly
perfect competition, monopoly, monopolistic and oligopoly
 
Market Structure and Types of Market Structure
Market Structure and Types of Market StructureMarket Structure and Types of Market Structure
Market Structure and Types of Market Structure
 
Market Structure- Micro Economics
Market Structure- Micro EconomicsMarket Structure- Micro Economics
Market Structure- Micro Economics
 

Semelhante a Economic And Market Review

Construction institute1.16.09ii
Construction institute1.16.09iiConstruction institute1.16.09ii
Construction institute1.16.09iitapask7889
 
Construction institute1.16.09ii
Construction institute1.16.09iiConstruction institute1.16.09ii
Construction institute1.16.09iitapask7889
 
Charting the Financial Crisis
Charting the Financial CrisisCharting the Financial Crisis
Charting the Financial CrisisAmy Kundrat
 
The magnificent 7 and equity markets review 11
The magnificent 7 and equity markets   review 11The magnificent 7 and equity markets   review 11
The magnificent 7 and equity markets review 11Markets Beyond
 
Economist Intelligence Unit Webinar: No Double Dip_8_26_10
Economist Intelligence Unit Webinar: No Double Dip_8_26_10Economist Intelligence Unit Webinar: No Double Dip_8_26_10
Economist Intelligence Unit Webinar: No Double Dip_8_26_10The Economist Media Businesses
 
ITB 301
ITB 301ITB 301
ITB 301fsnsr
 
2013 10-20 Possibles scenarios of crisis MiF-15' v12
2013 10-20 Possibles scenarios of  crisis MiF-15' v122013 10-20 Possibles scenarios of  crisis MiF-15' v12
2013 10-20 Possibles scenarios of crisis MiF-15' v12Konstatin Kurbatov
 
Why we will not experience a Depression
Why we will not experience a DepressionWhy we will not experience a Depression
Why we will not experience a DepressionGaetan Lion
 
Gri2009 u keynote
Gri2009 u keynoteGri2009 u keynote
Gri2009 u keynotetapask7889
 
Charting the Financial Crisis: A Narrative eBook
Charting the Financial Crisis: A Narrative eBookCharting the Financial Crisis: A Narrative eBook
Charting the Financial Crisis: A Narrative eBookShavondaBrandon
 
The Global Economy - No. 7/2010
The Global Economy - No. 7/2010The Global Economy - No. 7/2010
The Global Economy - No. 7/2010Swedbank
 
F Inancial Crises And Its Impact On Indian Economy
F Inancial Crises And Its Impact On Indian EconomyF Inancial Crises And Its Impact On Indian Economy
F Inancial Crises And Its Impact On Indian EconomyArif Anis Malik FRSA
 
Fixed Income Market Update (4-30-10)
Fixed Income Market Update (4-30-10)Fixed Income Market Update (4-30-10)
Fixed Income Market Update (4-30-10)Michael Matthews
 
Global Financial Crisis
Global Financial CrisisGlobal Financial Crisis
Global Financial CrisisKumar Kumar
 
Us Credit Crisis and Feds Response
Us Credit Crisis and Feds ResponseUs Credit Crisis and Feds Response
Us Credit Crisis and Feds Responseokili
 
Global Crisis Monitor June July 2009
Global Crisis Monitor   June July 2009Global Crisis Monitor   June July 2009
Global Crisis Monitor June July 2009Alvin Chua
 
The Global Economy – No. 8/2010
The Global Economy – No. 8/2010The Global Economy – No. 8/2010
The Global Economy – No. 8/2010Swedbank
 
2009 Inevitable Surprises
2009 Inevitable Surprises2009 Inevitable Surprises
2009 Inevitable Surprisesguest34cc8e
 
2009 Inevitable Surprises
2009 Inevitable Surprises2009 Inevitable Surprises
2009 Inevitable Surprisesjasonhuang10
 

Semelhante a Economic And Market Review (20)

Construction institute1.16.09ii
Construction institute1.16.09iiConstruction institute1.16.09ii
Construction institute1.16.09ii
 
Construction institute1.16.09ii
Construction institute1.16.09iiConstruction institute1.16.09ii
Construction institute1.16.09ii
 
Charting the Financial Crisis
Charting the Financial CrisisCharting the Financial Crisis
Charting the Financial Crisis
 
The magnificent 7 and equity markets review 11
The magnificent 7 and equity markets   review 11The magnificent 7 and equity markets   review 11
The magnificent 7 and equity markets review 11
 
Economist Intelligence Unit Webinar: No Double Dip_8_26_10
Economist Intelligence Unit Webinar: No Double Dip_8_26_10Economist Intelligence Unit Webinar: No Double Dip_8_26_10
Economist Intelligence Unit Webinar: No Double Dip_8_26_10
 
SubPrime Crisis
SubPrime CrisisSubPrime Crisis
SubPrime Crisis
 
ITB 301
ITB 301ITB 301
ITB 301
 
2013 10-20 Possibles scenarios of crisis MiF-15' v12
2013 10-20 Possibles scenarios of  crisis MiF-15' v122013 10-20 Possibles scenarios of  crisis MiF-15' v12
2013 10-20 Possibles scenarios of crisis MiF-15' v12
 
Why we will not experience a Depression
Why we will not experience a DepressionWhy we will not experience a Depression
Why we will not experience a Depression
 
Gri2009 u keynote
Gri2009 u keynoteGri2009 u keynote
Gri2009 u keynote
 
Charting the Financial Crisis: A Narrative eBook
Charting the Financial Crisis: A Narrative eBookCharting the Financial Crisis: A Narrative eBook
Charting the Financial Crisis: A Narrative eBook
 
The Global Economy - No. 7/2010
The Global Economy - No. 7/2010The Global Economy - No. 7/2010
The Global Economy - No. 7/2010
 
F Inancial Crises And Its Impact On Indian Economy
F Inancial Crises And Its Impact On Indian EconomyF Inancial Crises And Its Impact On Indian Economy
F Inancial Crises And Its Impact On Indian Economy
 
Fixed Income Market Update (4-30-10)
Fixed Income Market Update (4-30-10)Fixed Income Market Update (4-30-10)
Fixed Income Market Update (4-30-10)
 
Global Financial Crisis
Global Financial CrisisGlobal Financial Crisis
Global Financial Crisis
 
Us Credit Crisis and Feds Response
Us Credit Crisis and Feds ResponseUs Credit Crisis and Feds Response
Us Credit Crisis and Feds Response
 
Global Crisis Monitor June July 2009
Global Crisis Monitor   June July 2009Global Crisis Monitor   June July 2009
Global Crisis Monitor June July 2009
 
The Global Economy – No. 8/2010
The Global Economy – No. 8/2010The Global Economy – No. 8/2010
The Global Economy – No. 8/2010
 
2009 Inevitable Surprises
2009 Inevitable Surprises2009 Inevitable Surprises
2009 Inevitable Surprises
 
2009 Inevitable Surprises
2009 Inevitable Surprises2009 Inevitable Surprises
2009 Inevitable Surprises
 

Último

AI Fame Rush Review – Virtual Influencer Creation In Just Minutes
AI Fame Rush Review – Virtual Influencer Creation In Just MinutesAI Fame Rush Review – Virtual Influencer Creation In Just Minutes
AI Fame Rush Review – Virtual Influencer Creation In Just MinutesMd Hossain Ali
 
IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019
IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019
IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019IES VE
 
Linked Data in Production: Moving Beyond Ontologies
Linked Data in Production: Moving Beyond OntologiesLinked Data in Production: Moving Beyond Ontologies
Linked Data in Production: Moving Beyond OntologiesDavid Newbury
 
Comparing Sidecar-less Service Mesh from Cilium and Istio
Comparing Sidecar-less Service Mesh from Cilium and IstioComparing Sidecar-less Service Mesh from Cilium and Istio
Comparing Sidecar-less Service Mesh from Cilium and IstioChristian Posta
 
UiPath Community: AI for UiPath Automation Developers
UiPath Community: AI for UiPath Automation DevelopersUiPath Community: AI for UiPath Automation Developers
UiPath Community: AI for UiPath Automation DevelopersUiPathCommunity
 
Introduction to Matsuo Laboratory (ENG).pptx
Introduction to Matsuo Laboratory (ENG).pptxIntroduction to Matsuo Laboratory (ENG).pptx
Introduction to Matsuo Laboratory (ENG).pptxMatsuo Lab
 
Videogame localization & technology_ how to enhance the power of translation.pdf
Videogame localization & technology_ how to enhance the power of translation.pdfVideogame localization & technology_ how to enhance the power of translation.pdf
Videogame localization & technology_ how to enhance the power of translation.pdfinfogdgmi
 
Introduction to Quantum Computing
Introduction to Quantum ComputingIntroduction to Quantum Computing
Introduction to Quantum ComputingGDSC PJATK
 
NIST Cybersecurity Framework (CSF) 2.0 Workshop
NIST Cybersecurity Framework (CSF) 2.0 WorkshopNIST Cybersecurity Framework (CSF) 2.0 Workshop
NIST Cybersecurity Framework (CSF) 2.0 WorkshopBachir Benyammi
 
Spring24-Release Overview - Wellingtion User Group-1.pdf
Spring24-Release Overview - Wellingtion User Group-1.pdfSpring24-Release Overview - Wellingtion User Group-1.pdf
Spring24-Release Overview - Wellingtion User Group-1.pdfAnna Loughnan Colquhoun
 
UiPath Studio Web workshop series - Day 6
UiPath Studio Web workshop series - Day 6UiPath Studio Web workshop series - Day 6
UiPath Studio Web workshop series - Day 6DianaGray10
 
Basic Building Blocks of Internet of Things.
Basic Building Blocks of Internet of Things.Basic Building Blocks of Internet of Things.
Basic Building Blocks of Internet of Things.YounusS2
 
COMPUTER 10: Lesson 7 - File Storage and Online Collaboration
COMPUTER 10: Lesson 7 - File Storage and Online CollaborationCOMPUTER 10: Lesson 7 - File Storage and Online Collaboration
COMPUTER 10: Lesson 7 - File Storage and Online Collaborationbruanjhuli
 
The Data Metaverse: Unpacking the Roles, Use Cases, and Tech Trends in Data a...
The Data Metaverse: Unpacking the Roles, Use Cases, and Tech Trends in Data a...The Data Metaverse: Unpacking the Roles, Use Cases, and Tech Trends in Data a...
The Data Metaverse: Unpacking the Roles, Use Cases, and Tech Trends in Data a...Aggregage
 
GenAI and AI GCC State of AI_Object Automation Inc
GenAI and AI GCC State of AI_Object Automation IncGenAI and AI GCC State of AI_Object Automation Inc
GenAI and AI GCC State of AI_Object Automation IncObject Automation
 
Designing A Time bound resource download URL
Designing A Time bound resource download URLDesigning A Time bound resource download URL
Designing A Time bound resource download URLRuncy Oommen
 
KubeConEU24-Monitoring Kubernetes and Cloud Spend with OpenCost
KubeConEU24-Monitoring Kubernetes and Cloud Spend with OpenCostKubeConEU24-Monitoring Kubernetes and Cloud Spend with OpenCost
KubeConEU24-Monitoring Kubernetes and Cloud Spend with OpenCostMatt Ray
 
Bird eye's view on Camunda open source ecosystem
Bird eye's view on Camunda open source ecosystemBird eye's view on Camunda open source ecosystem
Bird eye's view on Camunda open source ecosystemAsko Soukka
 
UiPath Platform: The Backend Engine Powering Your Automation - Session 1
UiPath Platform: The Backend Engine Powering Your Automation - Session 1UiPath Platform: The Backend Engine Powering Your Automation - Session 1
UiPath Platform: The Backend Engine Powering Your Automation - Session 1DianaGray10
 
Empowering Africa's Next Generation: The AI Leadership Blueprint
Empowering Africa's Next Generation: The AI Leadership BlueprintEmpowering Africa's Next Generation: The AI Leadership Blueprint
Empowering Africa's Next Generation: The AI Leadership BlueprintMahmoud Rabie
 

Último (20)

AI Fame Rush Review – Virtual Influencer Creation In Just Minutes
AI Fame Rush Review – Virtual Influencer Creation In Just MinutesAI Fame Rush Review – Virtual Influencer Creation In Just Minutes
AI Fame Rush Review – Virtual Influencer Creation In Just Minutes
 
IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019
IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019
IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019
 
Linked Data in Production: Moving Beyond Ontologies
Linked Data in Production: Moving Beyond OntologiesLinked Data in Production: Moving Beyond Ontologies
Linked Data in Production: Moving Beyond Ontologies
 
Comparing Sidecar-less Service Mesh from Cilium and Istio
Comparing Sidecar-less Service Mesh from Cilium and IstioComparing Sidecar-less Service Mesh from Cilium and Istio
Comparing Sidecar-less Service Mesh from Cilium and Istio
 
UiPath Community: AI for UiPath Automation Developers
UiPath Community: AI for UiPath Automation DevelopersUiPath Community: AI for UiPath Automation Developers
UiPath Community: AI for UiPath Automation Developers
 
Introduction to Matsuo Laboratory (ENG).pptx
Introduction to Matsuo Laboratory (ENG).pptxIntroduction to Matsuo Laboratory (ENG).pptx
Introduction to Matsuo Laboratory (ENG).pptx
 
Videogame localization & technology_ how to enhance the power of translation.pdf
Videogame localization & technology_ how to enhance the power of translation.pdfVideogame localization & technology_ how to enhance the power of translation.pdf
Videogame localization & technology_ how to enhance the power of translation.pdf
 
Introduction to Quantum Computing
Introduction to Quantum ComputingIntroduction to Quantum Computing
Introduction to Quantum Computing
 
NIST Cybersecurity Framework (CSF) 2.0 Workshop
NIST Cybersecurity Framework (CSF) 2.0 WorkshopNIST Cybersecurity Framework (CSF) 2.0 Workshop
NIST Cybersecurity Framework (CSF) 2.0 Workshop
 
Spring24-Release Overview - Wellingtion User Group-1.pdf
Spring24-Release Overview - Wellingtion User Group-1.pdfSpring24-Release Overview - Wellingtion User Group-1.pdf
Spring24-Release Overview - Wellingtion User Group-1.pdf
 
UiPath Studio Web workshop series - Day 6
UiPath Studio Web workshop series - Day 6UiPath Studio Web workshop series - Day 6
UiPath Studio Web workshop series - Day 6
 
Basic Building Blocks of Internet of Things.
Basic Building Blocks of Internet of Things.Basic Building Blocks of Internet of Things.
Basic Building Blocks of Internet of Things.
 
COMPUTER 10: Lesson 7 - File Storage and Online Collaboration
COMPUTER 10: Lesson 7 - File Storage and Online CollaborationCOMPUTER 10: Lesson 7 - File Storage and Online Collaboration
COMPUTER 10: Lesson 7 - File Storage and Online Collaboration
 
The Data Metaverse: Unpacking the Roles, Use Cases, and Tech Trends in Data a...
The Data Metaverse: Unpacking the Roles, Use Cases, and Tech Trends in Data a...The Data Metaverse: Unpacking the Roles, Use Cases, and Tech Trends in Data a...
The Data Metaverse: Unpacking the Roles, Use Cases, and Tech Trends in Data a...
 
GenAI and AI GCC State of AI_Object Automation Inc
GenAI and AI GCC State of AI_Object Automation IncGenAI and AI GCC State of AI_Object Automation Inc
GenAI and AI GCC State of AI_Object Automation Inc
 
Designing A Time bound resource download URL
Designing A Time bound resource download URLDesigning A Time bound resource download URL
Designing A Time bound resource download URL
 
KubeConEU24-Monitoring Kubernetes and Cloud Spend with OpenCost
KubeConEU24-Monitoring Kubernetes and Cloud Spend with OpenCostKubeConEU24-Monitoring Kubernetes and Cloud Spend with OpenCost
KubeConEU24-Monitoring Kubernetes and Cloud Spend with OpenCost
 
Bird eye's view on Camunda open source ecosystem
Bird eye's view on Camunda open source ecosystemBird eye's view on Camunda open source ecosystem
Bird eye's view on Camunda open source ecosystem
 
UiPath Platform: The Backend Engine Powering Your Automation - Session 1
UiPath Platform: The Backend Engine Powering Your Automation - Session 1UiPath Platform: The Backend Engine Powering Your Automation - Session 1
UiPath Platform: The Backend Engine Powering Your Automation - Session 1
 
Empowering Africa's Next Generation: The AI Leadership Blueprint
Empowering Africa's Next Generation: The AI Leadership BlueprintEmpowering Africa's Next Generation: The AI Leadership Blueprint
Empowering Africa's Next Generation: The AI Leadership Blueprint
 

Economic And Market Review

  • 1. Economy & Market Review November 15, 2008
  • 2. A Snapshot of Global Economy
  • 3. World economy to slow down considerably Source: International Monetary Fund, World Economic Outlook November 2008 Note: Annual percentage changes in GDP for 2008 and 2009 are IMF estimated numbers After recording strong growth for four years, global economy is heading towards a downturn led by advanced economies. IMF has estimated a World GDP growth of 3.7% for 2008 and 2.2% for 2009.
  • 4. US economy weakening… Source: Bureau of Economic Analysis, United States Note: Percentage changes in GDP are over the corresponding period in the previous year. Q3-2008 numbers are preliminary estimates Experts including Federal Reserve Chairman Mr. Ben Bernanke now believe that the weakness in the US economy may continue through 2009. A U-shaped recovery seems to be the most likely scenario.
  • 5. …and so are other developed economies Source: IMF World Economic Outlook November 2008 Note: GDP growth is over the previous year. Growth for 2008 and 2009 are IMF projections With credit crisis spreading to Europe and Japan, those economies may also suffer a setback in terms of GDP growth. IMF forecasts that almost all advanced economies may now go into a recession.
  • 6. Emerging Economies shall also slowdown Source: IMF World Economic Outlook November 2008 Note: GDP growth is over the previous year. Growth for 2008 and 2009 are IMF projections Economic growth in emerging economies shall also slow down as per IMF estimates. IMF in its November 2008 outlook has projected India’s real GDP growth to come down to 6.3 percent in 2009.
  • 7. Home Prices in US continue their decline Source: Standard & Poor’s Note: Composite CSXR is a composite index of the home price index for the top 10 Metropolitan Statistical Area's in the United States . S&P Case-Shiller Composite 20 is a value-weighted average of 20 metro area indices. The S&P Case-Shiller Indices have corrected by approximately 20% from their peaks in June-July 2006. The home prices continue to correct as there is an oversupply situation in residential market in US.
  • 8. Falling Home Prices, Rising Foreclosures in US Source: Foreclosure Filings are from RealtyTrac, US. Case-Shiller Index values are from Standard & Poor’s Note: S&P Case-Shiller Composite 20 is a value-weighted average of 20 metro area indices As the home prices started falling and mortgage rates resetted at higher levels, the interest burden on home- owners increased. The sub-prime borrowers failed to refinance their loans and hence foreclosed their mortgages.
  • 9. Rising Unemployment in US is hurting Consumption Source: Bureau of Labor Statistics, United States Note: The unemployment data is seasonally adjusted Rapid rise in unemployment in US is bothering both Fed and the President-elect Barack Obama. Mr. Bernanke in his several testimonies has quoted that unemployment scenario is going to get worse before it gets better.
  • 10. Tale of “The Crisis” using CBOE VIX Source: Internal Research
  • 11. Tale of “The Crisis” using CBOE VIX I. Fannie Mae/Freddie Mac placed into a conservatorship run by the Federal Housing Finance Agency (FHFA) Bank of America announces plans to acquire Merrill Lynch. Lehman Brothers files for Chapter 11 protection, marking the largest bankruptcy in US history. American International Group (AIG) scrambles for capital after rating downgrades. Federal Reserve announces creation of credit facility of up to $85 billion for AIG. Goldman Sachs and Morgan Stanley become bank holding companies. NY Fed immediately provides access of bank’s broker dealer arms to Fed’s Primary Dealer Credit facility. JP Morgan Chase announces plans to acquire Washington Mutual. House of Representatives reject the US$ 700 billion bailout plan (asset purchase legislation). Citigroup announces plans to acquire Wachovia’s banking operations for US$ 1/share. Wells Fargo enters the fray and raises the bid to US$ 7/share. Sub-prime crisis spreads to Europe - HBOS, Hypo Real Estate and Fortis fail. HBOS acquired by Llyods TSB, Hypo Real Estate rescued by German government and Fortis is nationalized before being acquired by BNP Paribas.
  • 12. Tale of “The Crisis” using CBOE VIX I. US Senate and House of Representatives approve Troubled Assets Repurchase Program (TARP). The legislation is called Emergency Economic Stabilization Act of 2008. G-7 meeting results into a slew of measures being taken by the Central banks across the world. Fed authorizes swap lines of unlimited extent with BoE, ECB, SNB and BoJ to ensure sufficient dollar supply. Coordinated rate cuts by central banks. Fed, ECB, BoE, Sweden, Canada, Switzerland cut their benchmark rates by 50 bps, Chinese central bank by 27 bps and Australian central bank by 100 bps. After Ireland guarantees all its deposits, Germany, Denmark, Austria announced that they will also protect their savers and guarantee deposits. Many governments announce a guarantee on the interbank deposits and new debt. Fed announces to buy commercial paper directly from the corporates to keep the credit growth buoyant. Several emerging economies including Pakistan, Belarus, Hungary etc. having high current account deficits approach IMF for assistance. South Korea announces a package of US$ 130 billion to guarantee foreign exchange debt. Federal Reserve cuts the target rate by 50 bps to 1%. Bank of England cuts its benchmark rate by 150 bps to 3% while ECB cuts its rates by 50 bps. China announces an economic stimulus package of US$ 586 billion to be spent on Infrastructure till 2010.
  • 13. It’s a Crisis of Confidence more than anything else Source: US Federal Reserve The yield of three-month US Treasury Bill almost dropped to zero after Lehman Brothers filed for bankruptcy. The crisis has resulted in huge money shifting into US Treasury thus driving the yields to an all-time low.
  • 14. LIBOR shooting up signifies risk aversion Source: British Bankers Association Note: These are US dollar LIBOR rates The credit crisis has led to a liquidity squeeze. Financial Institutions are not lending to each other because of the fear of default by the counterparty. This has led to the LIBOR shooting to decade-high levels.
  • 15. Corporate bond spreads in US have shot to all-time highs Source: US Federal Reserve The corporate bond spreads (both AAA and BAA with 10-year US Treasury) have shot up significantly in the last 8- 10 months. The average spread of AAA in the last 55 years has been 77 bps (as compared to 196 bps at end- September 2008) while that of BAA has been 173 bps (as compared to 362 bps at end-September 2008).
  • 16. Sub-prime related losses Source: Financial Times, October 1, 2008. Note: The data is collated and updated by Bloomberg till September 30, 2008. The total sub-prime losses/write-downs estimated by Bloomberg as on September 30, 2008 stand at US$ 586 billion. Experts believe the losses could top US$ 1 trillion going forward.
  • 18. Global Inflation Source: International Monetary Fund World Economic Outlook, October 2008 Relentless rise in crude and commodity prices through 2007 and in the first half of 2008 made stagflation a potential threat. With expectations of a global economic slowdown firming up, commodity prices have corrected to factor in the demand destruction that may happen because of lower growth. Economists argue that global economy may get into a stag deflation kind of a period in the short to medium term.
  • 19. Coordinated efforts by Central Banks Note: Federal Reserve funds rate, Bank of England bank rate, ECB target refinancing rate, Bank of Japan Target rate and People’s Bank of China one-year lending rate Central banks across the globe have responded to the crisis in a coordinated fashion and cut their benchmark rates. They are also pumping money into the system, capitalizing their banks and guaranteeing deposits.
  • 20. A Snapshot of Indian Economy
  • 21. Indian GDP growth shall moderate Source: Central Statistical Organization, National Accounts India’s real GDP growth is set to moderate in 2008-09. The Prime Minister’s Economic Advisory Council has forecasted a growth of 7.7 percent for this fiscal. Various estimates put the growth between 7-8 percent.
  • 22. High Inflation… Source: Office of Economic Advisor Note: 2008-09 weekly averages till week ending October 25, 2008. Inflation over the corresponding period last year From the peak of 12.63%, Inflation in India has moderated to 8.98% for the week ending November 1, 2008. Good monsoon and sharp correction in global commodity prices have brought down the inflation expectations.
  • 23. …forced RBI to tighten the monetary policy Source: Reserve Bank of India RBI remained extremely hawkish on Inflation till August 2008. However, as the prices of commodities came off their highs and global liquidity situation deteriorated, RBI in the month of October aggressively cut CRR and Repo rate. On November 1, a lot of other monetary measures including reduction of SLR were announced.
  • 24. …which has adversely impacted the Industrial growth Source: Central Statistical Organization, India Monthly IIP growth has remained extremely volatile during this calendar year. However, there is no denial that IIP is in a clear downtrend. Now that IIP is falling, experts including Finance Minister have raised concerns on the constituents of IIP and their weights in the Index.
  • 25. Trade deficit is at a record high… Source: Department of Commerce, Government of India Note: Data for 2008-09 is for April – September while that of 2007-08 is provisional As India imports two-thirds of its crude requirement, the trade deficit for the first half is already 75% of the full- year trade deficit of 2007-08. Sharp and rapid rupee depreciation has also hurt the importers in the recent months.
  • 26. …and fiscal position is also deteriorating 6.5 Estimated Fiscal deficit (incl. off-budget liabilities) 6.2 6.0 Fiscal deficit excl off-budget liabilities Budget estimate 5.9 5.5 fiscal deficit/GDP (%) 5.0 4.5 4.5 4.0 4.1 4 3.5 3.2 3.0 3.4 3.2 2.5 2.5 2.0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08RE 2008-09F Source: CRISIL Research Note: The major off-budget liabilities are fertilizer and oil subsidies. The subsidies provided to oil marketing and fertilizer companies can blow up the fiscal deficit number. Besides, the 6th pay commission increases and a potential slowdown in direct and indirect taxes may also worsen the fiscal situation.
  • 27. Balance of Payments Situation doesn’t look good either Current account balances have deteriorated in this fiscal mainly because of rising trade deficit. On the other hand, capital is hard to come by because of the global liquidity crunch. Foreign Institutional Investors who brought over US$ 17 billion in calendar 2007, have pulled out over US$ 13 billion in this calendar year till October. FDI flows have been robust and that gives some solace. Source: Reserve Bank of India, SEBI and Department of Commerce, India
  • 28. Foreign Exchange Reserves though substantial have depleted Foreign Exchange Reserves have depleted at a rapid rate this fiscal. Forex reserves have lost over US$ 50 billion primarily due to euro-dollar movements and RBI selling dollars in the currency market to support the Rupee. RBI is seen supporting Rupee near 49-50 levels as sharp depreciation of INR hurts importers. Source: Reserve Bank of India,
  • 29. Tight Liquidity Conditions led to monetary easing Source: Reserve Bank of India The liquidity in the Indian financial system became extremely tight in late September and early October, a phenomenon observed across the globe. RBI acted swiftly and cut CRR and Repo rate and opened new LAF windows for mutual funds and NBFC who were under tremendous pressure due to inadequate liquidity.
  • 30. Credit & Money Supply growth remain above RBI targets Source: Reserve Bank of India RBI in its mid-term review has stated that credit growth was at 29.4% on a y-o-y basis upto October 10, 2008 compared to 23.1% a year ago. Similarly, the money supply growth of 20.3% is also above the RBI target of 17%
  • 31. Private Final Consumption Expenditure Source: Economic Survey 2007-08 India’s domestic consumption as a percentage of GDP is quite high which is comforting. That said, a slowdown in consumption demand cannot be denied with job market becoming weak and disposable incomes not growing the way that have been in the last few years.
  • 32. Gross Domestic Capital Formation (Investments) Investments have become an engine of growth in the past five years. However, as the economic growth gets into 7% zone, Investment from the private sector may come down in the short to medium term. We have witnessed robust FDI inflows during the last six months that indicate that as and when the financial crisis gets over, India can get on to that high growth trajectory Source: Economic Survey 2007-08
  • 33. Gross Domestic Savings Savings will remain the mainstay of Indian economy. With current savings rate hovering around that 35% mark, RBI projections say that Gross Domestic Savings may actually reach 36% of GDP by the end of 11th five year plan. Source: Economic Survey 2007-08 Source: Reserve Bank of India
  • 34. Demographic Dividend (Working population 15-64 years) Source: United Nations A population bulge in the working age group (15-64 years) is seen as an inevitable advantage characterized as a quot;demographic dividendquot;. India is, & will remain the youngest economy till 2050 with a median age of 38.6 years, as compared to China with 45 years & Japan with 54.9 years.
  • 36. Returns of major world indices Source: MFI Explorer Note: All Ordinaries – Australia; Dow Jones and Nasdaq – US; FTSE – UK; CAC 40 – France; DAX – Germany; Strait Times – Singapore; Hang Seng – Hong Kong; RTS – Russia; SSE Composite – China; Bovespa Sao Paulo – Brazil; Kospi – South Korea; Nikkei – Japan Equity markets across the world have registered huge losses in 2008. The primary reason is the flight of capital from riskier assets to safer assets like Treasury and sovereign bonds.
  • 37. Returns of major world indices Source: MFI Explorer Note: All Ordinaries – Australia; Dow Jones and Nasdaq – US; FTSE – UK; CAC 40 – France; DAX – Germany; Strait Times – Singapore; Hang Seng – Hong Kong; RTS – Russia; SSE Composite – China; Bovespa Sao Paulo – Brazil; Kospi – South Korea; Nikkei – Japan Majority of the benchmark equity indices are giving negative returns on a 3-year basis. Sensex has however performed quite well over its peers on a 3-year period.
  • 38. Indian Equity Markets – Sectoral Indices performance Source: MFI Explorer BSE Realty Index has lost close to 85% of its value in 2008. The Real estate sector is under severe strain due to high interest rates and reduced affordability because of high prices. BSE Metal which is the second worst performer has lost most of its value since August 2008 after the commodity bubble burst.
  • 39. Unprecedented volatility in Equity markets Source: National Stock Exchange, India Unprecedented volatility has been observed in the global equity markets in the last two months and India is not different in that regard. India VIX, which is a measure of market’s expectation of volatility over the near-term has almost gone up 100% since its inception on November 1, 2007.
  • 40. Fund flows in Indian equity market Source: Securities and Exchange Board of India FIIs have been in the thick of action during the last few years. A lot of capital was brought in by the FIIs which took the Sensex to 21,000 in January 2008. Since then, it has been a trend reversal. Although Mutual funds have bought equities, but their scale is much less as compared to foreign investors.
  • 41. Equity market volumes have dipped Source: National Stock Exchange of India Market volumes have thinned considerably during the last 7-8 months, a clear sign of risk aversion prevailing in the market. Total cash & F&O volumes have dipped by as much as 44% from October 2007 to October 2008.
  • 42. Corporate Performance showing first signs of strain Source: Capital Line The growth in EBITDA and PAT has come down sharply from its highs. The top-line growth has also started moderating from Q2-FY09 and as slowdown becomes more pronounced, revenues will be adversely impacted.
  • 43. Margins remain under pressure Source: Capital Line Margins both EBITDA and PAT have depressed in the last three quarters on the back of higher input costs. The recent drop in commodity prices shall come into effect from Q3-FY09 but this time around realization from sales may also come down.
  • 44. Overview of Fixed Income Markets
  • 45. Wholesale Debt Market trends The debt market capitalization has consistently increased over the past years. Corporate debt market however, continues to remain very shallow. The Government debt market still forms 88% of the market turnover. FII debt investment limits in corporate bonds were raised recently from US$ 3 billion to US$ 6 billion, which was availed instantaneously. SEBI has also proposed a lot of reforms for the Indian corporate bond market. Source: National Stock Exchange, India
  • 46. 10-year bond yields Source: Reuters and Office of Economic Advisor, India Yields of the 10-year Government paper moved up to as high as 9.4% before coming down below 8% as inflation expectations cooled off. The yields went below 7.5% after the inflation data for week ending November 1, 2008 came at 8.98%
  • 47. Corporate bond spreads have gone up Source: Reuters Corporate bond spreads have risen in the past few months mirroring the global trend. The 5-year AAA corporate bond spread rose to as much as 400 basis points.
  • 48. Fixed Deposit Rates have gone up Source: Reserve Bank of India
  • 49. Dollar has gained against majority of the currencies Source: Federal Reserve, United States Dollar has appreciated sharply against Euro and other major currencies since mid-July 2008. Yen is the only currency that has gained against dollar. Analysts believe that this phenomenon has got to do with the reversal of yen carry trade that prevailed for several years.
  • 51. Crude Oil now below US$ 60/barrel Source: Reuters and Federal Reserve, United States Crude oil has now corrected by over 60% from its peak in July 2008. The primary reason for the oil price correction is the expectation of demand destruction that may happen in the forthcoming years of global slowdown. Besides, US dollar has appreciated notably against Euro in the past few months.
  • 52. Gold Source: www.gold.org and Federal Reserve, United States Considered to be a safe haven, investors shifted their money to Gold leading to its prices breaching the US$ 1000/ounce mark for the first time. However, gold has corrected in line with other commodities in the past one month as US dollar continues to appreciate against major currencies.
  • 53. Copper Source: London Metal Exchange Copper prices also corrected by around 60% after getting hit by the concerns of lower demand going forward.
  • 54. Tin and Nickel Source: London Metal Exchange
  • 55. Aluminum Alloy, Zinc and Lead Source: London Metal Exchange
  • 56. Outlook The advanced economies led by US are likely to have a negative GDP growth for the next few quarters on the back of slowing private consumption. There is a growing consensus that economic recovery in these economies would be U-shaped at best and L-shaped at worst. Emerging economies including India and China shall also have spillover effects of this slowdown in advanced economies. Various international agencies and rating companies have already put a watch on India and downgraded its growth forecast for 2009 and 2010. As we run a high fiscal deficit, we don’t have any headroom for an economic stimulus package like China. Hence, an economic slowdown can affect the job market adversely, which in turn can impact consumption demand. On the domestic front, Q3 corporate results could come as a negative surprise to markets. General elections mid-next year and the resulting government shall be instrumental in giving markets some direction. We expect markets to remain range-bound and quite volatile at least for the next six months. It will continue taking cues from the global markets and price in the negative news coming in from all quarters. Even if we revise down the earnings of Sensex companies, the Sensex currently trades at around 9- 10 times Price-Earnings multiple on FY09 earnings estimates. If we take the inherent value in some stocks into account, this multiple comes down further.