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from Anatole Kaletsky:
The many interpretations of Ben Bernanke
Federal Reserve Board Chairman Ben Bernanke testifies before Congress in Washington, May 22, 2013. REUTERS/Gary Camero
On Wednesday in Washington, Federal Reserve Chairman Ben Bernanke presented congressional testimony that repeated, virtually word for word, statements about U.S. monetary policy he has been making since last September.
The Federal Reserve, Bernanke said, would continue buying $85 billion of bonds monthly until it was confident of reducing unemployment to 6.5 percent. The scale of these purchases might be increased or diminished – but only if and when such shifts were warranted by economic statistics. Now, he said, there is no case for a change in either direction.
The reaction to this tediously familiar statement, which was followed by publication of the equally repetitive minutes of the last Fed policy meeting, was some of the wildest gyrations seen in the world’s financial markets for months.
from Expert Zone:
Why FIIs are dumping India
(Any opinions expressed here are those of the author and not of Thomson Reuters)
The Indian stock market is in a tizzy as foreign institutional investors (FIIs) seem to have pressed the sale button. Securities and Exchange Board of India (SEBI) data shows that while there was a considerable slowdown in FII inflow in March, we are seeing an outflow in April.
While net FII inflow in the equity markets remained above $4 billion for each month between December 2012 and February 2013, the net inflow for March was reduced to $1.68 billion. The trend reversed and during April 3-10, there was a net outflow every day, with cumulative outflow of $269 million during this period.
from Expert Zone:
The stock market’s delayed response to Budget 2013
(Any opinions expressed here are those of the author and not of Reuters)
Finance Minister P. Chidambaram tried to humour the market in his budget by cutting the Securities Transaction Tax (STT) which had been one of its sore points. But the market was not amused. The Sensex continued to slide, indifferent to the budget which was presented with a lot of expectations.
This appears to be rather strange because the budget was well received by the industry, in spite of the increase in surcharge from 5 to 10 percent. It was possibly the realization that the finance minister lived up to his promise of cutting fiscal deficit to 4.8 percent which created an infectious confidence in growth revival.
from Expert Zone:
India Markets Weekahead: RBI policy review to be catalyst for markets
(The views expressed in this column are the author’s own and do not represent those of Reuters)
This was a listless week with the Nifty in the same band of 5640 and 5720 as the previous week, closing about 20 points lower at 5664. The festival season has begun but the mood on the street remains cautious.
from Expert Zone:
India market weekahead: Consolidation seen, earnings in focus
(The views expressed in this column are the author’s own and do not represent those of Reuters)
October has been touted as a difficult month for stocks, though for the Indian markets there didn’t seem to be anything stopping the repeat show of October 2011 until the flash crash on 5th.
from Global Investing:
Wages wag the tail of the DAX
This week, Germany celebrated its Tag der deutschen Einheit (Day of German Unity) marking twenty-two years since the wall was torn down between East and West.
Back in the present, Frankfurt's main share index, the DAX, has outperformed all of its European peers this year and in dollar terms has outshone almost every other global equity index. Re-unification has been painful, fostering social tensions and still huge disparities between east and west, but some analysts argue that it is precisely those disparities, not least in wages, which have underpinned the primacy of German stocks today.
from Unstructured Finance:
Former stock market ‘scalpers’ are vocal HFT critics
By Emily Flitter
REUTERS/Rebecca Cook
While the Securities and Exchange Commission maintains it does not need to do much to reign in the high frequency trading machines that have taken over Wall Street, a group of traders who understand how HFT firms make money—because it’s similar to the method they used to use themselves—have become vocal HFT critics. Yes, they may complain because they don’t make as much money as they used to, but they also think the machines are destabilizing the market.
Meet Dennis Dick, a prop trader in Detroit and a member of a league of stock market participants who have had to change their trading strategies now that they are no longer the fastest guns on the Street.
from Global Investing:
Obama better bet for US stocks?
The wealthy in the United States have a reputation for being firmly on the side of the Republican Party, but maybe they shouldn't be for the November presidential election.
According to Tom Stevenson, investment director at asset manager Fidelity Worldwide Investments, past evidence points to Democrat Barack Obama as possibly the more lucrative bet for equity investors. He says:
from Global Investing:
No BRIC without China
Jim O' Neill, creator of the BRIC investment concept, has been exasperated by repeated calls in the past to exclude one or another country from the quartet, based on either economic growth rates, equity performance or market structure. In the early years, Brazil's eligibility for BRIC was often questioned due to its anaemic growth; then it was the turn of oil-dependent Russia. Over the past couple of years many turned their sights on India due to its reform stupor. They have suggested removing it and including Indonesia in its place.
All these detractors should focus on China.
China's validity in BRIC has never been questioned. Aside from the fact that BRI does not really have a ring, that's not surprising. China's growth rates plus undoubted political and economic clout on the international stage put it head and shoulders above the other three. And after all, it is Chinese demand which drives a large part of the Russian and Brazilian economies.
from Global Investing:
In India, no longer just who you know
It's not what you know but who you know. There are few places where this tenet applies more than in India but of late being close to the powers in New Delhi does not seem to be paying off for many company bosses.
Look at this chart from specialist India-focused investor Ocean Dial. It shows that since mid-2011 companies perceived as politically well-connected have significantly underperformed the broader Mumbai index. The underperformance has intensified this year.
