For what it's worth

Sammie, me and Harish watched Tropic Thunder on Sunday.. A "short" background tune from the movie sounded very familiar. After a couple of google attempts, I did get the song. the song was sung by Buffalo Springfield -" For what it's worth". Amazigly 'feel good' lyrics, coupled with a resonating guitar plucks, a soothing 70's melody!! . This also is an OST from one of my all time favourites "Forrest Gump".





Had a pretty nice weekend.. Went to see an exhibition match starring Jim Courier and Anna Kornikova... The best part of the whole thing is I came as close as 1 foot distance to Anna.. She is a doll!!! I was so stupid that I kept taking her pictures instead of asking her autograph.. Anyhow, I was very excited to having seen her so upclose..





Where is the Rupee headed?
Couple of my friends were asking me this question, and I thought I will write something about it.
Exchange rate is traded like a commodity and is set by the same demand and supply fundamentals. If forex investors see an opportunity in Indian markets, they pump in cash into the system by buying Indian rupee (Rupee appriciates). Conversely, when investors flee indian markets, selling the rupee, the currency depriciates. over the last couple of years, the net foriegn inflows grew from $6.8 Bn in 2000, and 15.4Bn in 2004 to 26.5 Bn in 2006. Strong economic growth, corporat eperformance, cheaper borrowing terms overseas, higher domestic interest rate have been driving these inflows. Offlate, the reversal has started to happen. The weakness in emerging markets (EM amrkets were the worst hit.. Brazil, Korea, China, India, Pakistan... ) has forced the investors to liquidate Rupee assets and hold the cash in dollar terms. This has been driving the Indian currency down( and exchange rate up). Sales of Indian shares by overseas investors this year exceeded purchases by a record $12.2 billion as the Sensex slid more than 55 percent.. When would the run end?? when the liquidation of the local assets end. which inturn would end when investors retain back the confidence in Indian stock market, and when investors stop investing in safe havens - gold and dollar. But with the crdit crisis spread across the globe the only two currencies that are showing strength are the dollar(safe bet) and yen ( reversal of carry trade).. Is there anything RBI could do? Well, they could increase the interest rates.. but at the expense of domestic corporate growth. Is a lower rupee bad for teh economy.. well.. the argument sways either wise.. Lower rupee is good for the exports.. It would make domestically manufactured products cheap for foreign nations.. at the same time, it would make imports expensive... I personally think that it might reach 52 before gaining its strength again.

Outrageous news: Goldman Sachs in talks with Citi for a merger.. Goldman merging with a traditional consumer bank was long anticipated as it is now a bank holding company, but,, the plans of merger with Citi is not quite... If the deal goes through, it would be an intimidating combination,, though Citi no longer is as good and BIG a bank it was earlier. Also, it seems the money thats put in the banks as preferred stock by the Fed/Treasury, is not being used for purposes it should have. In an internal employee meet of JPM, when an employee asked the question when would JPM start issuing loans with the treasury money, Dimon literally said 'never' and added taht the money would be used to 'gobble' weak banks. Well, Bear Stearns, Wamu and whats next in the bag of JPM.. anyways, with banks using up the capital to shore up their balance sheets or to 'acquire' weaker counterparts, I dont think the revival is going to take its sweet course..

Meantime, DOW is down 230 points today.. and the trend of last minute collapse is no longer a trend but a rule!! ( a drop of about 430 points in the last 30 min.. wtf!!) .. Interesting are the headlines in my inbox.. Midway in the day it was 'Stocks shed early losses and post a gain' and later in teh evening the headlines read 'stocks shed mid day gains'... :) ..

An interesting graph from FT..


showing the swing of the markets in intervals over a day before and after the lehman collapse. Notice the action in the first and the last hour.. huge moves.. Its hard to predict, well, its stupid not hard, to even try to predict the market moves by fundamentals.. The market is way beyond teh reach of fundamental explanation.

Goldman Sachs is planning to cut 10 per cent of its workforce in response to the worsening economic environment. The cutbacks will fall most heavily on areas such as fixed income and investment banking. Most of the cuts would be in London and Newyork offices. And I sit and gloat!!! :)

The Fed today has set the interest rates it will charge companies for the commercial paper it will buy from them under the CPFF program. Earlier last week, GE said that it would access funds from the CPFF program. This should help the cash squeezed corporations. Corporations typically issue 1day to 30 day commercial paper to finance their working capital. The revival of the 1.4 T CP market should bring down the key rates (LIBOR, CDS spreads). This should prompt a weak rally in the market over this week and may be into the next, but this prediction comes with a discalimer!! :)


Tax plan of McCain and Obama simplified..

Finally, an interesting article to prove that every assumption on the stock market demise is untrue.. All the claims about the current grim situation

1. Bank lending to non-financial corporations and individuals has declined sharply.
2. Interbank lending is essentially nonexistent.
3. Commercial paper issuance by non-financial corporations has declined sharply and rates have risen to unprecedented levels.
4. Banks play a large role in channeling funds from savers to borrowers

are proved wrong.. This is what I am talking about.. You can never be sure of what you think is right, in these markets..