$46 Billion Rally Shows India’s Tech Woes Are Easing

$46 Billion Rally Shows India's Tech Woes Are Easing

$46 Billion Rally Shows India’s Tech Woes Are Easing – optimism is returning to Indian information technology companies, as the decline in the likelihood of a recession in the United States and the emergence of artificial intelligence as a potential new source of income contribute to the recovery of their shares.

📈 The NSE Nifty IT index has risen by 18% from the April low, increasing the market value by about $ 46 billion. The indicator, consisting of 10 participants, rose a notch in July and is on track to surpass the MSCI World Information Technology Index for the first time in seven months.

*️⃣ Profits increased after Asia’s largest software services exporter Tata Consultancy Services Ltd. last week reported a higher-than-expected profit for the latest quarter. Its shares rose along with shares of similar companies, including Infosys Ltd., whose reporting is scheduled today.

While TCS said some customers were deferring costs, the profit figures helped allay concerns about the impact of the economic downturn on customers around the world that plagued the industry earlier this year. The company and its colleagues, who have already submitted reports, also confirmed profitable offers in the field of automation and other new technologies.

“Generative AI has become the highlight of the quarter,” said K., CEO of Tata Consultancy. Kritivasan on the company’s profit and loss statement last week. “In every conversation I’ve had with clients over the past three months, this has invariably come up.”

The newfound optimism marks a change after Infosys warned just a few months ago about customers in key sectors such as finance retreating due to recession fears in the US and Europe, the largest markets for Indian IT companies. These concerns were exacerbated by the instability of the global banking system after the collapse of the Silicon Valley Bank.

According to Mark Matthews, Head of Asia-Pacific Research at Bank Julius Baer & Co, software exporters “return capital to investors with lots of dividends and buybacks.” “Entering the space was a good correction.” @ESG_Stock_Market

UK inflation has finally slowed down

​​#UK #inflation #rate #BOE

UK inflation has finally slowed down

In June, consumer price growth in the UK finally slowed by 0.1% mom and 7.9% YoY.  Lower fuel prices helped (-2.7% mom and -22.7% YoY), which contributed to a general decrease in commodity prices in June by 0.2% mom, annual growth slowed to 8.5% YoY. The growth of food prices also slowed down somewhat to 0.4% mom, but the annual growth rate here remained high and amounted to 17.4% YoY. The strengthening of the pound also played a role here against the background of expectations of a rate hike by the Bank of England, since a significant part of commodity consumption is tied to imports.

With services, the current price dynamics turned out to be the same as in May +0.5% mom, although the annual growth slowed slightly to 7.2% YoY. The dynamics of salaries play an important role here, which continue to grow quite intensively so far. As a result, core inflation slowed down slightly to 0.2% mom and 6.9% YoY. Retail price growth also slowed to 0.3% mom and 10.7% YoY, but still remains extremely high.

In July, the marginal tariffs for gas and electricity should decrease, which will lead to a decrease in overall inflation, but the trend of core inflation is likely to form around ~ 6% per year. Given the significant dependence of prices on the pound exchange rate (i.e. the position of the Bank of England) and services (salaries), if the Central Bank backs up, as it likes, it can get an additional boost through the exchange rate, but the Bank of England is prone to a “twitchy” policy, therefore it is possible that it will try to soften the position.

​​#UK #inflation #rate #BOE

@ESG_Stock_Market

The Lira drifts on

The Lira drifts on

#TRY #Turkey #rates #inflation
 
The Lira drifts on

Before the betting decision, the Turkish lira resumed its run up to 27. Although the market hopes for an increase in the rate from 15 to 20%, this is still not enough to somehow match the inflationary situation, which does not yet imply stable inflation below 2-3% per month. The real rate will still remain negative. The financial system operates in a rather distorted reality, when the average deposit rates in lira remain significantly higher than the average loan rates…
 
PS: The loss of income from the “grain deal” is also likely to put pressure on the lira, given the persistently negative current account. @ESG_Stock_Market

China: there is growth, but not the same

China: there is growth, but not the same

​​​​#China #economy #retail #manufacturing #GDP

China: there is growth, but not the same. The Chinese economy continues to show rather modest growth. In June, retail sales increased by 0.2% mom and 3.1% YoY. In fact, nominal sales over the past 2 years have grown at a rate of 3.1% per year, in real terms, retail has grown by a modest 1.2% annually. In general, for the 2nd quarter, real sales increased by an impressive 11.1% yoy, but relative to the failed quarter of last year, when it was -8.1% yoy, because the real growth over two years was about 1% annually. So consumer demand looks weak so far.

Production looks a little better, growth by 0.7% mom and 4.4% YoY, over the past two years it has grown by an average of 4.1% per year. There is some support from exports, but the total capacity utilization is 74.5%, which is lower than the levels of last autumn, when it was about 78%. Quarterly growth of 4.5% YoY, but again relative to the low base of last year, so the two-year growth momentum is quite modest (2.5%).

GDP growth was 4.8% YoY in nominal terms and 6.4% YoY in real terms. In quarterly terms, GDP growth was 0.8% QoQ, GDP was pulled by the services sector, which grew by 1% QoQ and 6.4% YoY. But in general, all this is a consequence of the low base of last year, when in the second quarter of 2022 the Chinese economy practically stopped (growth was 0.4% yoy). The credit momentum is slowing down a bit, although the total amount of financing has been growing quite actively, but not enough to warm up the economy.

In general, while China has not managed to accelerate the economy in any meaningful way, growth rates are closer to 3% per year than to the target 5%. In such a situation, it is worth waiting for new and new incentives, although, objectively, it is not very clear yet how to push the population out of the savings model (deposits increased by 2.7 trillion ~ $370 billion in July alone). In a good way, the recipe here is higher inflation and lower rates, a more aggressive budget, but the Chinese authorities are not ready for active steps yet. @ESG_Stock_Market

What Does the US Housing Market Have in Store for Us?

The US housing market continues to revive

​​#USA #mortgage #real estate #economy #inflation

The US housing market continues to revive

The American housing market has adapted to high rates at the moment and continues to revive slowly. The laying of new single-family houses in May sharply increased by 18.5% mom, the annual dynamics remained negative -5% YoY. The number of construction permits issued grew modestly +5.4% mom and -8.1% yoy.

Sales of single-family homes on the secondary market did not change much in May (-0.3% mom), since the fall of 2022, the decline has stopped here. Sales of new single-family homes in May soared to 763 thousand per year., giving an increase of 12.2% mom and 25.9% yoy. The shortage of ready-made housing remains an actual story, housing stocks for sale cover only 3 months of sales in the secondary market, overstocking is higher in the primary market, but has decreased very sharply (6.7 month of sales).

Prices on the US secondary market in May showed an annual drop of 3.4% yoy, but this is rather the effect of the base of last year, the current price dynamics indicates that the decline has stopped and prices are rising. Zillow for May counted a price increase of 0.5% mom and 2% YoY, S&P today published a report for April, where an increase of 0.5% mom and a fall of -0.2% yoy, in the 20 largest cities +0.9% mom and -1.7% yoy.
In fact, at the moment prices returned, albeit to inactive, but growth, against the background of a shortage of ready-made housing, despite the fact that mortgage rates are 6.5-7%. Considering that Zillow and other sources indicate that rent growth has resumed at a rate of 0.5-0.6% mom, it turns out that even in this segment of the economy (extremely sensitive to rates), price pressure will not go away so quickly. The Fed will have to strain even more now …

PS: And consumer confidence has grown. @ESG_Stock_Market

How was it in 2021/2022 when the national debt increased?

How was it in 2021/2022 when the national debt increased?

The last time the debt limit was raised on December 16, 2021, what happened:

The US Treasury took $0.64 trillion on the market in 6 weeks, of which $0.28 trillion (44%) were bonds, the rest were short–term bills, deposited $700 billion to the Federal Reserve account (in January the budget surplus).

The Fed’s reverse repos did not change much last time, remaining in the region of $1.6-1.65 trillion, everything went into reducing the cache of US banks of $ 450-500 billion.

The UST10Y yield rose from ~1.4% to 1.8% by the end of January and to 2% by mid-February, but then the Fed was entering a policy tightening cycle. In the first two weeks, the S&P 500 rewrote the highs above 4.8K, after which it confidently turned down;

The situation then was different from the current one: the Fed was still conducting QE and bought ~ $120 billion worth of securities in 6 weeks, now QT in similar volumes (the supply of government debt to the market will be greater). Back then, the market was already laying the beginning of a rate hike cycle, now the cycle is on the wane and the market is laying a decline. Then the banks had a large amount of free liquidity, now it is comparable to what Yellen would like to take to her accounts and she will have to fight for it, which implies pressure on government bonds (premiums for loans).

@ESG_Stock_Market

The recession has reached the labor market

The recession has reached the labor market

📉👷‍♂️The recession has reached the labor market. According to the US Department of Labor, unemployment in May rose to 3.7% (6.09 million). With a forecast of 3.5%. In April, it was 3.4%. In May, the indicator returned to the level of November 2022.

Unemployment in May is the most active growth in the youth segment of 16-19 years (10.3%). Among the main ethnic groups, African Americans have the highest unemployment rates (5.6%). The main trend in May is an increase in the rate of reduction of employees with higher education:
🏫College 3.2%
🎓Bachelor’s degree 2.1%
Previously, high rates were mainly among unskilled labor.

👩‍💼The main groups of unemployed are those laid off in December-February 2023 and May 2023.
Duration of job search:
▪less than 5 weeks +217K
▪️5-14 weeks -50
▪️15-26 weeks +179
▪️More than 27 weeks +3

@ESG_Stock_Market

USA: vacancies have grown again

USA: vacancies have grown again

​​#unemployment #inflation #economy #Crisis

USA: vacancies have grown again

The report on vacancies in the United States for April recorded an increase in open vacancies to 10.1 million, the data for March was also revised up. Although, in general, the situation on vacancies indicates a further decline, but it is not happening so quickly, and the market remains very overheated. There were 1.8 open vacancies per 1 unemployed person in April, i.e. the excess is still very large. All the growth occurred in the private sector (430 thousand), the public sector recorded a reduction in vacancies.

Surveys of small businesses confirm this situation – the majority of companies claim a significant amount of open vacancies. Compensation in the small business sector is also growing, but here the indicators have decreased. In general, there is no way to say that the labor market has come out of the overheating phase, weekly applications for unemployment benefits are still at a fairly low level below 250 thousand. The total number of benefits is 1.8 million, which also does not yet indicate any significant changes in the labor market. There are a number of signals for a slowdown in wage growth, but the growth rates themselves remain much higher than the Fed would like to see.

In general, while the labor market does not allow the Fed to relax…

#unemployment #inflation #economy #Crisis @ESG_Stock_Market

The US economy is experiencing a phenomenon similar to what preceded the recession of 2007-2008.

US economy

#recession #economy #gdp #gfc #vvd

The US economy is experiencing a phenomenon similar to what preceded the recession of 2007-2008.
📍We usually estimate the state of the economy by GDP, which continues to grow in real terms (taking into account inflation) – this is shown by the brown line on the charts. However, if we pay attention to gross domestic income in real terms, that is, the sum of all incomes in the economy adjusted for inflation, then this indicator has been falling for the second quarter in a row (marked on the upper graph). The main reason for this is a decrease in corporate income.
In the United States, the process characteristic of the beginning of the recession begins – a reduction in income. Similar dynamics of indicators were observed before the Great Financial Crisis (shown in the lower graph), and who knows, perhaps the coming crisis will become even more majestic. @ESG_Stock_Market

US economy
US economy
US economy
US economy

India vs China Economic Power

India vs China Economic Power

Why India will continue to lag behind China as a global economic power. Asking why India did not succumb to the Marxist revolution after gaining independence in 1947, while China emerged under Mao Zedong as a radically transformed Marxist power, Moore identified a wide range of powerful inertial forces in India that prevented revolution and constrained economic change — and continue to do so even today.
Perhaps the most important were rural power structures cemented around caste, which still have a greater impact on social and economic development than most economists recognize.
The absence of a revolution in India has left in place existing power structures and long-standing vested interests, as well as the corruption they nurtured, blocking radical political or economic changes that have stimulated China’s economic growth since the late 1970s. Corruption remains a scourge in India and a serious obstacle to growth.
The inability to adequately spend on education, health, social security and other key infrastructure is also holding back progress. Only 46% of Indians have access to safe sanitation (compared to 70% in China) and only 43% have access to the Internet (70% in China).
▪️ You can juggle data to the point of nausea, but the reality of the last 40 years remains unchanged: India’s progress is present, but slow, and the country will continue lag behind China. @ESG_Stock_Market

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