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%.
The current COVID-19 crisis is causing economic as well as social disruptions, and businesses are no exception. Though central banks worldwide have announced various multi-billion-dollar stimulus packages to contain the economic impact, it has still failed to boost investor confidence.
The world is in the midst of the COVID-19 pandemic trying to control the social and financial fallout. The already struggling financial markets have nose-dived due to the world economy coming to a grinding halt. Social distancing is being practiced across the world to flatten the infection curve and give the government and administration a fighting chance
In last three weeks, the major central banks in the world have gone in overdrive to stabilize the markets.
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 the wider context of structure of our society, as discussed below.
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.
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 managed by NY Fed from 7<sup>th</sup> July 2000 till 17<sup>th</sup> March 2020.
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.
The Indian banking industry is undergoing a radical change driven by intense competition from new entrants in the industry, continuously evolving regulatory environment and the changing business models. Technological advancements and innovations have further altered the business landscape for all financial institutions, whether banking or non-banking.
In December of 1930 Bank of United States (BOUS), based primarily in the city of New York failed. It was the first bank failure in the USA during the great depression which started in Oct 1929.
In the recent weeks the headlines are screaming about the impending trade wars, the expected shrinkage in global trade and its impact on the overall welfare of the humankind.
Since India’s April-June 2017 (Q1FY18) numbers are printed below market expectations, there has been some discussions whether demonetization is responsible for the low GDP print.
The Indian GDP rate came significantly below expectations at 5.7% in the Q1FY18 (Apr-June 2017) The Table below shows the contribution to the GDP growth by type of expenditure.
We estimate Central Fiscal Deficit for April-June 2017 quarter for India to be at approximately 10.75% of the GDP of that quarter. This is because of planned increase in capital expenditure by the central government in that quarter. To maintain the preannounced target of 3.20% of GDP for fiscal deficit for the year April 2017 till March 2018, the deficit for the nine-month period July 2017 till March 2018 should not significantly exceed 0.75% of GDP of that period.
The low inflation print in recent months has raised some important methodological questions. RBI relies heavily on the internal models that it has developed for its inflation forecast and hence for making interest rate decisions.
In one of my previous write ups, I sketched the most likely scenario of India facing deflation pretty soon. In this write up, I will describe various responses that RBI should have to have for this emerging black swan event. (Black Swan as far as markets and policy makers are concerned.
In response to one of my previous blogs, some readers privately raised questions as to why I think AI will emerge spontaneously. Here is my detailed reasoning.
The latest reading of Indian CPI came in at 1.54% for June 2017. This is the first time the inflation has breached RBI band of 2% to 6%. I am sure there would be a lot of soul searching going on at offices of many authorities as to what it means.
Nearly all futurists, who think about technology, agree that singularity is between half a generation to two generations away from today. Most of them, except notably Ray Kurtzweil, think that a superintelligent AI will be as indifferent to the needs and aspirations of humans just the way we humans are indifferent to those of ants.
In this note we will see how behavior of RBI in recent years is proving a relative impediment to economic growth.
Recently, I became aware of a philosophical topic “The Repugnant Paradox” via an excellent YouTube Video "http://bit.ly/2tWEgf5" . A more technical description of the paradox can be found at
Across the world, AI is the talk of town for last two years or so. This area of enquiry is making significant strides day by day, covering more and more ground, and will catch up with animal level intelligence sooner rather than later.
Recently, our Head of Talent Management pointed out to me that AI applications, mainly chatbots, seem carry the same biases that humans display.
In my blog report published on the website of Decimal Point Analytics on 14th March 2011, I had posited that Jasmine Revolution (Arab Spring) is indicative of slow emergence of collective human consciousness, enabled by the Internet, while the problems in the Eurozone currency area at that time are indicative of the fact that our collective consciousness is not at the same level as that of a colony of honeybee.
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