AKG weekly charts - Issue #100
This newsletter is a weekly selection of 10 charts hand-picked across the internet which pertains to our investment strategy and bring an updated insight and perspective.
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Summary of financial markets in last week here
[1] Supplier delivery time is a crucial element of inventory management, as practitioners use it to determine if they must order earlier and spend extra money to ensure adequate inventory or stand pat and run the risk of a stock out. This number is sharply rising now as Global manufacturing PMI above 50 on a more consistent basis.
[2] Average 30yr fixed rate mortgage in the US is at ~6.5% and 5yr auto loans rates at ~7.5% are close to the highest in two decades. Might be this time it is different, but it would be imprudent to completely ignore the risk. [See detailed note here]
[3] The U.S. government spent a record US$232 billion in interest payments on its debt in the first quarter of 2023, over 50% more than a year ago. That comes as the Fed lifted interest rates a whopping 5% beginning March 2022. Consumers and businesses aren’t the only ones feeling the pain of higher borrowing costs because of Federal Reserve rate hikes. Uncle Sam is, too!
[4] History is clear that even getting close to a breach of the U.S. debt ceiling could cause significant disruptions to financial markets that would damage the economic conditions faced by households and businesses. We will see a lot of volatility in the coming weeks from US as ‘X-date’ approaches.
[5] Over the last 50 years, the S&P 500 (.SPX) has gained an average of 4.8% between November and April, and just 1.2% between May and October. However, this pattern fades over a shorter time-frame. Over the last 20 years, the out-performance of November-April over May-October narrows to 1%. Over 10 years, November-April has underperformed May-October by 1% and over the last five years, it's underperformed by 3%.
[6] The short term impact from the banking crisis have hit the IT sector but the revenue growth and global IT spend over next few years is expected to be strong given the rise in cloud adoption and AI breakthroughs. The time to go OW may be couple of quarters away.
[7] High frequency indicators continue to improve in India - CAD has improved; GST collections are at all time high; lead economic indicators like freight haulage, auto sales, power demand etc. are improving. [See detailed note here]
Source : Morgan Stanley
[8] Pollution levels are seen to be marginally higher than the same period last year in India thereby hinting at stronger activity improvement.
[9] Electricity consumption in India saw a drop over the last few months. Given the broad increase in activity across the board, this probably could be linked to unseasonal rainfall over different parts of India; perhaps leading for a lower need for air conditioning and cooling.
[10] The air traffic in India has caught up to pre-Covid levels. Rail traffic still lagging behind. With the strong induction of Vande Bharat trains over next 12 months till general elections, will we see this gap in rail passengers fill?
Disclaimer:
This newsletter is for information purposes only. In this material, Amit Kumar Gupta (SEBI registered Research Analyst, INH100009327) has used information that is publicly available and is believed to be from reliable sources. While utmost care has been exercised, the author does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers, before acting on any information herein should make their own investigation & seek appropriate professional advice. Any sector(s)/ stock(s)/ issuer(s) mentioned do not constitute any recommendation and the RA may or may not have any future position in these. All opinions/ figures/ charts/ graphs are as on date of publishing (or as at mentioned date) and are subject to change without notice. Any logos used may be trademarks™ or registered® trademarks of their respective holders, our usage does not imply any affiliation with or endorsement by them. Past performance may or may not be sustained in the future and should not be used as a basis for comparison to infer any investment ideas.