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TRANSCRIPT
The Alpha Investor Issue #9, July 2020
History doesn’t repeat, but it often rhymes
Dear Investor, The theme of last month’s issue was how markets were pricing in a near perfect scenario with absolutely no margin for error. This month, we look at lessons from history and some technical factors that could indicate a potential reversal.
We go back 50 years to look at the story of Nifty Fifty and see how the same scenario is playing today right in front of our eyes and what lessons can be drawn from the past.
In light of the recent “euphoric” price action, we have turned bearish as we believe that risk-reward ratio is not at all favorable for equities at this point of time.
Happy reading!
Shubham Satyarth
Co-founder, Finpeg
INSIDE THIS ISSUE
1. Cover Story
2. Indian Markets
3. Indian Macro
4. Global Markets
5. Global Macro
6. Performance Data
Smart solutions for smart money
The Alpha Investor | Issue# 9
The Alpha Investor, July 2020 | Issue #9| Finpeg
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What’s Inside?
HISTORY DOESN’T REPEAT, BUT IT OFTEN RHYMES ................................................................................. - 3 -
THE STORY OF NIFTY FIFTY ..................................................................................................................................... - 3 - LESSONS FOR TODAY ............................................................................................................................................. - 4 - MARKET INTERNALS REMAIN FRAGILE ....................................................................................................................... - 6 - SENTIMENT BORDERING ON EUPHORIA ..................................................................................................................... - 7 - LISTEN TO THE BOND MARKETS ................................................................................................................................ - 8 - BE CAREFUL OUT THERE ......................................................................................................................................... - 8 -
INDIAN MARKETS – ON A ROCKET! ......................................................................................................... - 9 -
1. EQUITY MARKET WRAP FOR THE MONTH ............................................................................................................... - 9 - 2. EQUITY MARKET VALUATIONS ..........................................................................................................................- 11 - 3. DEBT MARKET WRAP FOR THE MONTH ...............................................................................................................- 12 - 4. WHAT IS THE “SMART” MONEY DOING? ..............................................................................................................- 13 -
ECONOMY – A LONG TEDIOUS ROAD AHEAD ........................................................................................ - 14 -
1. SUMMARY AND OUTLOOK ................................................................................................................................- 14 - 2. GDP AND THE ECONOMY .................................................................................................................................- 15 - 3. INFLATION AND MONETARY POLICY ....................................................................................................................- 16 - 4. EXCHANGE RATE – STABLE DURING THE MONTH ...................................................................................................- 17 -
GLOBAL MARKETS – MIXED BAG OF A MONTH ...................................................................................... - 18 -
1. GLOBAL EQUITY MARKETS ...............................................................................................................................- 18 - 2. GLOBAL DEBT MARKETS ..................................................................................................................................- 19 - 3. DOLLAR AND GOLD .........................................................................................................................................- 20 -
GLOBAL MACRO ................................................................................................................................... - 21 -
1. GLOBAL MACRO SNAPSHOT .............................................................................................................................- 21 -
PERFORMANCE DATA ........................................................................................................................... - 24 -
1. BEST PERFORMING EQUITY MUTUAL FUNDS IN JULY 2020 ....................................................................................- 24 -
The Alpha Investor, July 2020 | Issue #9| Finpeg
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History doesn’t repeat, but it often rhymes “History doesn't repeat Itself, but It often rhymes”
– Mark Twain For a change, let’s begin this issue by rewinding the clock by almost 50 years. Let me tell you the story of Nifty Fifty. No, not our Indian stock index, but a list of US blue-chip stocks in 1970s.
The story of Nifty Fifty The term Nifty Fifty was an informal designation for fifty popular mega-cap stocks in the 1960s and 1970s. Most of these companies still exists – the likes of Coca Cola, GE, Xerox, McDonalds and so on (here is the full list). The stocks in Nifty Fifty were thought of as must-have stocks in your portfolio. They were described as “buy and never sell”. All these companies were growing rapidly (and paying handsome dividends) and it was widely believed that nothing could go wrong with these stocks. By late 60s and early 70s, these stocks became the darling of investors. And as these stocks kept outperforming the broader indices, their valuations soared.
“The delusion was that these companies were so good, it didn’t matter what you paid for them; their inexorable growth would bail you out.
Obviously the problem was not with the companies but with the temporary insanity of money managers — proving again that stupidity well-packaged can sound like wisdom. It was so easy to forget that no sizable company could possibly be worth over 50 times normal earnings.” Forbes Magazine
At the peak (December 1972), the Nifty Fifty’s average PE was 42, more than double that of S&P 500 which was 19. And some of the companies were trading at an even more insane valuations – Polaroid with a P/E of 91; McDonald’s, 86; Walt Disney, 82.
Exhibit 1: 27 of the Nifty Fifty companies traded above 40 PE
Source: The Nifty Fifty revisted, Jeff Fesenmaier & Gary Smith
90.7
85.783.3 81.6
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1972 P/E of Nifty Fifty stocks
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And then January 1973 happened. The US markets collapsed and that started the process of slow unravelling of Nifty 50 stocks. As Forbes noted, “the Nifty Fifty were taken out and shot one by one.” From their respective highs, for instance, Xerox fell 71%, Avon 86% and Polaroid 91%. This was a beginning of a gut-wrenching bear market that lasted 21 months and Dow Jones index lost 45% from its peak. In fact, Dow did not claim its January 1973 high for another 9 years. Now, don’t get me wrong. Nifty Fifty bubble was unlike the dot-com bubble. The companies in Nifty 50 were actually high-quality companies with strong balance sheets and strong earnings growth. In fact, a lot of companies actually continued to perform fairly well. But their stock returns did not mimic the underlying performance. Because, at the height of the bubble, it did not matter what investors paid for the stocks. Even for high quality businesses, what you pay matters. High valuation “now” simply implies lower returns in “future”. Even high-quality businesses can be poor investments if they are bought at extended valuations.
Lessons for today Markets today bear an eerie resemblance to heydays of Nifty Fifty in 1972. There is a group of select stocks that seem to have no ceiling when it comes to what investors are willing to pay for them. These companies are mega cap stock with strong balance sheets and strong “story”. I am talking about the mega tech stocks – Facebook, Amazon, Netflix, Google, Microsoft, Apple and Nvidia (the FANGMAN stocks). Might as well add Tesla to it. What’s happening with prices and valuations of these stocks is pretty much similar to what happened with the darlings in Nifty Fifty. No price seems high enough. The big-5 (Facebook, Amazon, Google, Microsoft, Apple) now account for over 20% of S&P 500 index for the first time in history (Exhibit 2). And most of the rebound in S&P 500 (since March) has been led by the rebound in these stocks (Exhibit 3).
Exhibit 2: The big-5 account for 20% of S&P 500
Source: FT
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To get a perspective on the size of these stocks, the combined market cap of FANGMAN stocks is greater than the GDP of Japan, Germany, India etc. Market cap of Apple alone (at around US$ 1.9 trillion) is more than the combined market cap of all stocks traded on BSE. And despite rich valuations, investors keep flocking to it, with absolutely no upper-bound for valuations. Exhibit 3 below shows that valuations for the Big-3 is now at the levels last seen during the peak of dot-com bubble. And nothing highlights the mania more than Exhibit 4 which shows that despite the slowest revenue growth in over a decade, valuation of Big-4 (Amazon, Apple, Facebook and Google) continues to soar. What’s fueling this mania? Well, easy money and the belief that these mega-cap tech stocks are beyond correction. They are thought to be secular growers. Also, they are believed to benefit most from the current pandemic that has accelerated further consolidation of power towards these big tech. Surprisingly, none of the above is incorrect. These are the strongest companies out there and will likely continue to perform well given their scale and near monopoly. But then, that’s the characteristic of a typical bubble. It always starts with an underlying assumption that is largely true (Technology did change the world – Dot Com Bubble). But soon, the underlying “truth” becomes such a strong self-reinforcing loop that investors lose the sense of reality. At the peak of the mania, investors are willing to buy at any price. The bubble stocks can never go down. Valuation doesn’t matter. Until it does.
Booms start with some tie-in to reality, some reason which justifies the increase in asset values, and then -- and this is the critical feature of speculative mood -- the market loses touch with reality. John Kenneth Galbraith
What we are witnessing today is a clear sign of bubble being formed in the stock market in general and tech space in particular. Current valuation levels are simply not justified. And it would be dangerous to chase this mania.
Exhibit 3: Bulk of the rally in US stock market has been led by the top tech stocks
Source: TheFelderReport.com
Exhibit 4: Big-4 valuation continues to soar despite revenue growth being slowest in decade
Source: TheFelderReport.com
The Alpha Investor, July 2020 | Issue #9| Finpeg
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Market internals remain fragile If we take a closer look at this rally, we can see that the rally has been largely driven by select stocks in US. In India, Reliance Industry has been the poster boy for this rally while in US, it the pack of big tech (including Tesla). Due to their higher weightage in the index, they have also lifted the index disproportionately. The top-5 stocks in S&P 500 has increased by 33% since start of the year. On the other hand, 495 stocks have on average declined by 5% (see Exhibit 5). That’s a huge divergence. Although the breadth of rally in India has been quite decent, if we break down the performance of NIFTY 50, we find that almost 29% of the rally has been driven by a single stock – Reliance Industries. And then there is the worrying signs of Banks (and Financials) continuing to underperform the broader index. A new bull market (after an end of a business cycle) is generally lead by Banks and Financials signaling a revival in economic activity. However, this does not appear to be the case so far as Banks have continued to underperform the broader index (Exhibit 7). While Nifty is down just 9.1% YTD, NIFTY Bank is down 32.6% YTD. Contrast this with what happened during the recovery of 2009 (Exhibit 8). It was the Banks and Financials that led the recovery thus signaling a true revival in underlying economic activity.
Exhibit 7: Banks have underperformed the broader index indicating a potential head fake recovery
Source: NSE
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NIFTY vs NIFTY Bank
NIFTY NIFTY Bank
Exhibit 8: In 2009, the recovery was led by Banks and Financials
Source: NSE
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NIFTY vs NIFTY Bank (2009)
NIFTY NIFTY Bank
Exhibit 5: Bulk of the rally in S&P 500 has been driven by the top-5 stocks
Source: FT
Riven
Exhibit 6: Reliance has accounted for 29% of NIFTY rally since March lows
Source: NSE
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Contribution to NIFTY 50 rally
The Alpha Investor, July 2020 | Issue #9| Finpeg
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Sentiment bordering on euphoria Investor sentiment has 2 extremes – extreme risk aversion and extreme greed. It is very important to track investor sentiment as they can be a strong indicators of market bottoms and peaks. And right now, investor sentiment is bordering on extreme greed. CNBC’s Fear & Greed Index (Exhibit 9), shows Investor sentiment at Greed levels. However, if we look at some other sentiment indicators like put/call ratio (Exhibit 10), we find it to be in extreme greed levels.
And then we have frenzied participation from new retail investors both in India and the US. Direct equity trading has seen an unprecedented spike in retail participation since March (Exhibit 12). Never a good sign.
Exhibit 9: CNBC Fear and Greed Index showing investor sentiment as greed
Source: CNBC
Reed or sen
Exhibit 10: CBOE Equity Put Call Ratio is at its lowest levels signaling extreme optimism
Source: Ycharts
The Put/Call Ratio is an indicator that shows put volume relative to call volume. Put options are used to hedge against market weakness or bet on a decline. Call options are used to hedge against market strength or bet on an advance. The Put/Call Ratio is above 1 when put volume exceeds call volume and below 1 when call volume exceeds put volume. Typically, this indicator is used to gauge market sentiment. Sentiment is deemed excessively bearish when the Put/Call Ratio is trading at relatively high levels and excessively bullish when at relatively low levels.
Exhibit 11: Citigroup Panic vs Euphoria now suggests more euphoria than January
Source: Citi
Exhibit 12: Google trends for call options and day trading hit all time high
Source: Google
The Alpha Investor, July 2020 | Issue #9| Finpeg
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Listen to the bond markets Looking at US Treasury market can give us some very important insights into the path of the economy and inflation (one of the variables in our algorithm). And unlike the equity markets, bond markets are screaming loud and clear that there will be no quick recovery. US 10-year treasury yields have fallen to lows of 0.52% and continue to fall. While there is an argument that yields are falling primarily because there is a ready buyer in Fed. We however don’t agree with this. If we trace back to previous QEs, we can see the yields actually rose in Q1 and Q3 mirroring an actual recovery in underlying economy. In QE2, yields actually kept falling. Coincidentally, QE1 and QE3 were great for stock markets while QE2 was not. Bond markets are smart, and one should listen to them. We discuss this in more detail in our Global Debt Markets section.
Be careful out there In our last issue, we had discussed economic fundamentals and valuations as the reasons for our bearish stance. In this issue, we have focused more on history and technicals to suggest that we are in a bubble. However, no argument on bubble can be complete without one more look at valuations. Needless to say, both US and Indian markets are near their all-time-high valuations. You don’t want to chase equities at these levels.
Generally, it is very difficult to predict when this speculative mania ends. There can be no end to human greed (and speculative behaviour). But history tells us that once it happens, it happens fast and gets pretty ugly. We don’t have to go back longer than just 4 months to realise how ugly it could potentially get. And looking at both the fundamentals and the technicals, all we can say to investors right now is – be careful out there!
Exhibit 13: S&P 500 forward PE ratio is at levels only seen during dot com bubble
Source: Yardeni Research Inc
Exhibit 14: NIFTY PE (TTM) is now above 30 for the first time in history
Source: NSE
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The Alpha Investor, July 2020 | Issue #9| Finpeg
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Indian Markets – On a rocket!
1. Equity Market wrap for the month Table 1: Index Returns as of 31st July, 2020
1 Month 3 Months 6 Months 1 Year Year to date
NIFTY 7.49% 12.31% -7.43% -0.40% -9.00%
NIFTY Mid Cap 5.22% 14.59% -14.10% -2.83% -9.54%
BSE Small Cap 5.18% 17.29% -11.22% 2.60% -4.95%
NIFTY Auto 8.34% 23.36% -9.98% 6.25% -11.74%
NIFTY Bank 1.26% 0.49% -29.82% -25.06% -32.71%
NIFTY FMCG 2.69% 7.68% 0.32% 6.22% 2.49%
NIFTY IT 22.49% 28.09% 11.94% 15.70% 15.46%
NIFTY Pharma 11.65% 19.53% 36.99% 39.58% 38.67%
NIFTY Commodities 5.60% 12.69% -8.25% -7.66% -12.01%
NIFTY Energy 6.34% 16.38% 3.17% 5.15% -3.77%
Markets continue to rally despite headwinds
Indian markets continued to rally in July defying the underlying economic gravity. As of 31st July, NIFTY was down just 10.4% from its January highs and is up a staggering 45.5% from its march lows.
Even the broader markets (mid and small caps) continued their stellar run in July. IT and Pharma were the top sectors during the month returning 22.5% and 11.65% respectively. Banks and FMCG were the underperformers during the month.
Exhibit 15: Mid and small caps now performing in line with large caps YTD
Source: BSE and NSE
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Index performance since Jan 2018
NIFTY Mid Cap 100 BSE Small Cap NIFTY50
Exhibit 16: Small caps outperformed NIFTY in in first 7 months of 2020
Source: NSE
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BSE Small Cap Nifty Midcap 100 NIFTY 50
The Alpha Investor, July 2020 | Issue #9| Finpeg
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Also, as of month end on 31st July, NIFTY 50 broke its 200 dma resistance.
Exhibit 17: Index performance with common base since Jan 2018 till Sep 2019
Source: BSE and NSE
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NIFTY NIFTY Mid Cap 100 BSE Small Cap
Exhibit 18: Index performance with common base since 1st Jan 2020
Source: BSE and NSE
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Relative Index Performance in 2020
NIFTY NIFTY Mid Cap 100 BSE Small Cap
Exhibit 21: NIFTY 50 vs percentage of stocks above their 200-day moving average
Source: NSE
Exhibit 22: NIFTY 50 vs percentage of stocks above their 50-day moving average
Source: NSE
Exhibit 19: A broad-based rally in June for NIFTY 50 stocks
Source: NSE
Exhibit 20: NIFTY broke the 200 dma resistance in the month of July
Source: NSE
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NIFTY 50 vs 50 DMA vs 200 DMA
NIFTY 50 NIFTY 50 50DMA NIFTY 50 200DMA
The Alpha Investor, July 2020 | Issue #9| Finpeg
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2. Equity Market Valuations While valuations started looking really attractive by the end of march and early April, the current rally has ensured that valuations are now back to historical highs. NIFTY PE is back to 2 SD above its historical average. As on 31st July, NIFTY PE (trailing 12 months) was 30.2, the highest on record. And this doesn’t even account for full earnings carnage of Q1FY21 (and quarters beyond). Even NIFTY Equal Weight index which was 1 SD above its historical average at the start of this month is now 2 standard deviation above its historical average (Exhibit 24). So, the broader large-cap space is now pretty richly valued. Note a sharp spike in mid cap PE. This is likely due to presence of loss-making companies in the index skewing the PE ratio. If we look at the PE of NIFTY Midcap Liquid 15 (the 15 most liquid stocks), the PE is close to historical average. While at the face of it, mid and small caps may look fairly valued. But as we keep warning our investors, a correction (or a crash) driven by global phenomena will likely take down everything. And as highlighted in our cover section, there is a high probability of such an event happening in the near term.
Exhibit 23: NIFTY PE levels are now 2 SD above historical average
Source: NSE
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ay-0
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28-M
ay-0
1
28-M
ay-0
2
28-M
ay-0
3
28-M
ay-0
4
28-M
ay-0
5
28-M
ay-0
6
28-M
ay-0
7
28-M
ay-0
8
28-M
ay-0
9
28-M
ay-1
0
28-M
ay-1
1
28-M
ay-1
2
28-M
ay-1
3
28-M
ay-1
4
28-M
ay-1
5
28-M
ay-1
6
28-M
ay-1
7
28-M
ay-1
8
28-M
ay-1
9
28-M
ay-2
0
NIFTY PE (TTM)
P/E Average 1SD 2SD
Exhibit 24: NIFTY Equal Weight Index is now 2SD above historical average
Source: NSE
8
13
18
23
28
30-Apr-10 30-Apr-11 30-Apr-12 30-Apr-13 30-Apr-14 30-Apr-15 30-Apr-16 30-Apr-17 30-Apr-18 30-Apr-19 30-Apr-20
NIFTY 50 Equal Weight PE
P/E Average Plus 1SD Plus 2SD Minus 1SD Minus 2SD
Exhibit 25: Mid Cap index PE has gone through the roof likely due to losses in index constituents
Source: NSE
7
17
27
37
47
57
05/
10
05/
11
05/
12
05/
13
05/
14
05/
15
05/
16
05/
17
05/
18
05/
19
05/
20
NIFTY Midcap 150 PE
P/E Average 1 SD 2 SD
Exhibit 26: BSE Small cap index is trading near its historical average PB
Source: BSE
1
1.2
1.4
1.6
1.8
2
2.2
2.4
2.6
2.8
3
Ap
r-15
Jun-
15
Au
g-15
Oct
-15
Dec
-15
Feb-
16
Ap
r-16
Jun-
16
Au
g-16
Oct
-16
Dec
-16
Feb-
17
Ap
r-17
Jun-
17
Au
g-17
Oct
-17
Dec
-17
Feb-
18
Ap
r-18
Jun-
18
Au
g-18
Oct
-18
Dec
-18
Feb-
19
Ap
r-19
Jun-
19
Au
g-19
Oct
-19
Dec
-19
Feb-
20
Ap
r-20
Jun-
20
Au
g-20
BSE Small Cap P/B
PB Average Plus 1 SD Plus 2 SD Minus 1 SD Minus 2 SD
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 12 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
3. Debt Market wrap for the month June was a relatively muted month for bond markets as 10-year GSEC yield declined marginally by 10 bps while the 3-month bill increased by 16 bps. This led to flattening of the yield curve for the first time in several months. Likely reason for increase in 3-month yield is inflation numbers sticking around 6% (upper range of RBI). This has also led the RBI to keep the rates unchanged in its recently concluded policy meet (August 5th). The other reason is that RBI is pushing for some flattening of the yield curve by selling shorter dated securities and buying longer dated ones through its open market operations (OMO). Year-to-date, the yields have fallen by 73 bps and 173 bps (for 10-year and 3-month) making bonds one of the best performing asset class (along with gold) in the first half of 2020. Despite rising concerns about inflation, we strongly remain in the camp that the current bout of inflation is short-term and, pretty soon, global disinflationary pressure will take over. Therefore, we are of view that yields on both short and longer dated securities are headed lower. Further, RBI’s intervention to keep 10-year yields from rising gives us confidence that we are unlikely to see a sharp spike in yields in near future. We discuss more on our inflation view here.
Table 2: Returns of Gilt and Medium to Long duration Funds
Scheme Name 1M 3M 6M
YTD
1Y
IDFC Bond Fund 1.82% 4.10% 6.29% 6.40% 11.65%
ICICI Prudential Bond Fund 1.89% 4.23% 7.21% 7.28% 13.21%
HSBC Debt Fund 1.03% 3.54% 6.35% 6.67% 10.45%
IDFC G Sec Fund 1.44% 5.61% 9.36% 10.00% 15.61%
DSP Govt Sec Fund 0.74% 4.82% 9.04% 9.55% 16.06%
Nippon India Gilt Securities Fund 1.11% 4.75% 8.02% 8.55% 13.52%
Exhibit 27: 10-year GSEC yields decreased by marginal 10 bps in July
Source: Bloomberg
2.00
4.00
6.00
8.00
10.00
12.00
06/
99
03/
00
12/
00
09/
01
06/
02
03/
03
12/
03
09/
04
06/
05
03/
06
12/
06
09/
07
06/
08
03/
09
12/
09
09/
10
06/
11
03/
12
12/
12
09/
13
06/
14
03/
15
12/
15
09/
16
06/
17
03/
18
12/
18
09/
19
06/
20
Indian GSEC yields
GSEC10Y GSEC3M
Exhibit 28: 10-year Bharat Bond Index has outperformed 3-year index
Source: NSE
920
940
960
980
1000
1020
1040
1060
1080
1100
1120
1140
01-Jan-20 01-Feb-20 01-Mar-20 01-Apr-20 01-May-20 01-Jun-20 01-Jul -20
Bharat Bond Index (April 2023 and April 2030)
Bharat Bond 2023 Bharat Bond 2030
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 13 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
4. What is the “smart” money doing? FIIs continued to be net buyer in the month of July in the equity segment, albeit at a slower pace. FIIs bought Rs 7,663 cr in July as compared to Rs 21,832 cr in June. Year-to-date, FIIs are still a net seller in equities selling Rs 10,850 cr where most of selling happened in March. FIIs continued to be net sellers in the debt segment selling Rs 2,476 cr in the month of June. DIIs (Mutual Funds) were net sellers in Equity in July for the second consecutive month. DIIs sold Rs 7,226 cr (net) in July as against Rs 3,690 cr in June. DIIs were net buyers in the debt segment buying Rs 23,066 cr (net) in July.
Exhibit 29: Monthly FII/FPI inflows in Equity markets
Source: NSDL
-₹70,000
-₹60,000
-₹50,000
-₹40,000
-₹30,000
-₹20,000
-₹10,000
₹0
₹10,000
₹20,000
₹30,000
Mar
-10
Sep-
10
Mar
-11
Sep-
11
Mar
-12
Sep-
12
Mar
-13
Sep-
13
Mar
-14
Sep-
14
Mar
-15
Sep-
15
Mar
-16
Sep-
16
Mar
-17
Sep-
17
Mar
-18
Sep-
18
Mar
-19
Sep-
19
Mar
-20
Monthly FII/FPI Inflows (Equity)
Average FII Equity
Exhibit 30: Calendar year FII inflows in Equity and Debt markets
Source: NSDL
-0.03
1.281.13
0.97
0.18 0.21
0.51
-0.33
1.01
-0.11
0.42 0.35
-0.51
1.59
0.46
-0.44
1.49
-0.48
0.26
-1.09
-1.50
-1.00
-0.50
0.00
0.50
1.00
1.50
2.00
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Yearly FII/FPI Inflows (lac cr)
Equity Debt
Exhibit 31: Monthly Domestic Institutional Investors (MF) inflows in Equity markets
Source: Moneycontrol
-₹15,000
-₹10,000
-₹5,000
₹0
₹5,000
₹10,000
₹15,000
₹20,000
₹25,000
₹30,000
Ap
r-14
Au
g-14
Dec
-14
Ap
r-15
Au
g-15
Dec
-15
Ap
r-16
Au
g-16
Dec
-16
Ap
r-17
Au
g-17
Dec
-17
Ap
r-18
Au
g-18
Dec
-18
Ap
r-19
Au
g-19
Dec
-19
Ap
r-20
Monthly DII Inflows (Equity)
Average DII Equity
Exhibit 32: Calendar year DII inflows in Equity and Debt markets
Source: Moneycontrol
0.240.71
0.48
1.17 1.13
0.49
0.18
6.23
4.47
3.333.90
3.25
5.26
1.16
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
2014 2015 2016 2017 2018 2019 2020
Yealy DII inflows (lac cr)
Equity Debt
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 14 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
Economy – A long tedious road ahead
1. Summary and Outlook After over 2 months of stringent lockdown, India started to slowly unlock from 1st of June with more relaxations given in subsequent months. However, things actually started slowing down in July as compared to June as surging cases forced a lot of places to force a total lockdown. The same is corroborated by manufacturing PMI for July which slipped to 46 as compared to 47.2 in June. Even the services PMI showed only a marginal improvement of 34.2 in July as compared to 33.7 in June but still remained in sharp contraction territory. These PMI numbers are a big cause of worry. While the rest of the world moved to PMIs above 50 in July thus indicating expansion in activity over June, India still remains in contraction. And not just that, the rate of contraction itself increased in July as indicated by fall in manufacturing PMI and almost flattish services PMI. We believe that it is pertinent for authorities (central, state and local) to start seriously contemplating the economic impact of the lockdown. In July, we witnessed a lot of places going under complete lockdown including industrial clusters of Thane and Chennai. Total sporadic lockdowns still persist and India’s biggest economic hub (MMRDA) still faces lots of restriction. If we look at Exhibit 32 which shows Google’s mobility (a proxy for activity levels) for various places/activities, we are still at very depressed levels. Exhibit 33 is even more worrying. It tracks the 7-day moving average trend in mobility. As can be seen, after early June, the recovery has flatlined and in some cases actually decreased in July. The somber picture of Indian Economy and its recovery (or lack of it) makes the price actions in Indian stock markets even more surprising and hence, even more unsustainable. While consensus estimate for GDP for FY21 is de-growth of 4%-5%, we believe that we are easily on track to do worse. Given how high-frequency data is shaping up, we believe that the road to recovery will be a long and tedious one. And stock markets should catch up to this reality sooner rather than later.
Exhibit 32: Google mobility trend suggests that mobility levels are still very depressed
Source: Google
-54%
0%
-47%
-37%
-34%
-60%
-50%
-40%
-30%
-20%
-10%
0%
Retail And Recreation Supermarket and pharmacy Parks Public Transport Workplaces
Google Mobility Trends
Exhibit 33: Mobility has flatlined since early June and decreasing in some cases
Source: Moneycontrol
100.00
80.00
60.00
40.00
20.00
0.00
20.00
21/
02/2
0
28/
02/2
0
06/
03/2
0
13/
03/2
0
20/
03/2
0
27/
03/2
0
03/
04/2
0
10/
04/2
0
17/
04/2
0
24/
04/2
0
01/
05/2
0
08/
05/2
0
15/
05/2
0
22/
05/2
0
29/
05/2
0
05/
06/2
0
12/
06/2
0
19/
06/2
0
26/
06/2
0
03/
07/2
0
10/
07/2
0
17/
07/2
0
24/
07/2
0
31/
07/2
0
Mobility Trend (7 DMA)
Retail and Recreation Grocery and Supermarkets Parks Public Transport Workplaces
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 15 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
2. GDP and the economy As mentioned above, the sharp uptick that we witnessed in June seems to be slowing down as we approach August, and this is a very worrying sign. As evidenced by the Google Mobility chart (Exhibit 32 and 33) shown above, we are still at depressed levels and the trend is not very encouraging. But this is also not a surprise. Despite, Unlock 1.0 – 3.0, our reopening has been patchy at best with big industrial centers still struggling to cope with surging COVID-19 cases (read Mumbai) and total lockdowns being imposed sporadically across India. To top it all, we now have cases growing in hitherto unaffected parts of India. From big urban center of Bengaluru to clusters in Eastern India. The surge will not help in resumption of economic activity to pre-COVID levels anytime soon. The only silver lining is that the economic hub of Mumbai (and adjoining suburbs) may have peaked. However, stringent lockdown restriction still persists. Manufacturing PMI numbers for July were disheartening to say the least. Not only did we not move into month-on-month expansion (indicated by reading above 50), a dip in PMI from June levels indicated that rate of contraction also increased. Services PMI registered a modest increase in July but still remain at extremely depressed level of 34.2. The rest of the world has moved above 50 in both Services and Manufacturing PMI.
Exhibit 35: Real GDP growth likely to go negative in 1st quarter of FY21 (and full year FY21)
Source: MOSPI
Negative
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
02/
1998
02/
1999
02/
2000
02/
2001
02/
2002
02/
2003
02/
2004
02/
2005
02/
2006
02/
2007
02/
2008
02/
2009
02/
2010
02/
2011
02/
2012
02/
2013
02/
2014
02/
2015
02/
2016
02/
2017
02/
2018
02/
2019
Quarterly GDP Growth
Real GDP Growth Linear (Real GDP Growth)
Exhibit 36: Recovery in PMI stalled in the month of July
Source: TradingEconomics, Finpeg
5
15
25
35
45
55
65
Ap
r-12
Jun-
12
Au
g-12
Oct
-12
Dec
-12
Feb-
13
Ap
r-13
Jun-
13
Au
g-13
Oct
-13
Dec
-13
Feb-
14
Ap
r-14
Jun-
14
Au
g-14
Oct
-14
Dec
-14
Feb-
15
Ap
r-15
Jun-
15
Au
g-15
Oct
-15
Dec
-15
Feb-
16
Ap
r-16
Jun-
16
Au
g-16
Oct
-16
Dec
-16
Feb-
17
Ap
r-17
Jun-
17
Au
g-17
Oct
-17
Dec
-17
Feb-
18
Ap
r-18
Jun-
18
Au
g-18
Oct
-18
Dec
-18
Feb-
19
Ap
r-19
Jun-
19
Au
g-19
Oct
-19
Dec
-19
Feb-
20
Ap
r-20
Jun-
20
Markit Manufacturing & Services Purchasing Managers Index
Manufacturing PMI Services PMI
Exhibit 37: IIP contracted by 35% in the month of May
Source:MOSPI
-60.00
-50.00
-40.00
-30.00
-20.00
-10.00
0.00
10.00
20.00
30.00
07/
2006
03/
2007
11/
2007
07/
2008
03/
2009
11/
2009
07/
2010
03/
2011
11/
2011
07/
2012
03/
2013
11/
2013
07/
2014
03/
2015
11/
2015
07/
2016
03/
2017
11/
2017
07/
2018
03/
2019
11/
2019
IIP Growth Monthly
IIP Growth
Exhibit 38: YoY change in IIP still in negative growth in May
Source:MOSPI
-70.00
-60.00
-50.00
-40.00
-30.00
-20.00
-10.00
0.00
10.00
20.00
30.00
03/20
08
03/20
09
03/20
10
03/20
11
03/20
12
03/20
13
03/20
14
03/20
15
03/20
16
03/20
17
03/20
18
03/20
19
03/20
20
YoY change in IIP growth
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 16 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
3. Inflation and monetary policy We note that headline inflation numbers (CPI and WPI) were not published for the month of March and April (as well as provisional numbers for May) as the agency was not able to complete the necessary survey work due to the lockdown. Official numbers for June have been published and CPI inched up 6.09% while WPI shrank by 1.8%. CPI print of 6.09% is above RBIs target range and has given rise to concerns about inflationary pressures in months ahead. We however believe that the inflationary pressure is short term (driven by supply chain disruption and rising energy and commodity prices) and we will soon start seeing disinflation. WPI tends to lead CPI and if we look at wholesale price inflation, we have been seeing deflation for 2 consecutive months. The inflation narrative is fueled by following reasons: (1) Unprecedented monetary and fiscal stimulus, (2) disruption in supply chain owing to COVID-19 and trade war and (3) inflation in commodity prices seen recently. If we look at commodities index (Exhibit 40), it is now flattening after rising sharply from its April lows. The index was up just 3.2% in July after inflating almost 40% from its April lows. Even crude prices are now flattening after sharp inflation from April lows. These rates-of-change in crude and commodities and the unprecedented demand shock reinforces our belief that current inflationary pressure is likely a transitory phenomenon, likely to give way to disinflation. Discussed in more detail here. \
Exhibit 39: Deflationary pressure grips wholesale prices even as CPI remains sticky
Source: CEIC, Finpeg Research
-10.00
-5.00
0.00
5.00
10.00
15.00
20.00
03/
2007
09/
2007
03/
2008
09/
2008
03/
2009
09/
2009
03/
2010
09/
2010
03/
2011
09/
2011
03/
2012
09/
2012
03/
2013
09/
2013
03/
2014
09/
2014
03/
2015
09/
2015
03/
2016
09/
2016
03/
2017
09/
2017
03/
2018
09/
2018
03/
2019
09/
2019
03/
2020
Indian Inflation Rate
CPI Change (YoY) WPI Change (YoY)
Exhibit 40: Commodity index is now flattening after rising sharply till June
Source: Bloomberg
0
100
200
300
400
500
600
700
800
01/08/10 01/08/11 01/08/12 01/08/13 01/08/14 01/08/15 01/08/16 01/08/17 01/08/18 01/08/19 01/08/20
S&P GSCI
Exhibit 41: WTI crude is also flattening after sharp rise from April lows
Source: MacroTrends, Finpeg Research
0
20
40
60
80
100
120
140
160
01/
00
12/
00
11/
01
10/
02
09/
03
08/
04
07/
05
06/
06
05/
07
04/
08
03/
09
02/
10
01/
11
12/
11
11/
12
10/
13
09/
14
08/
15
07/
16
06/
17
05/
18
04/
19
03/
20
WTI Crude (USD/barrel)
Exhibit 42: Repo rate stands at 4%, lowest in last 15 years
Source: Reserve Bank of India
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
Jan
-06
Jun-
06
No
v-0
6
Ap
r-07
Sep-
07
Feb-
08
Jul-0
8
Dec
-08
May
-09
Oct
-09
Mar
-10
Au
g-10
Jan
-11
Jun-
11
No
v-1
1
Ap
r-12
Sep-
12
Feb-
13
Jul-1
3
Dec
-13
May
-14
Oct
-14
Mar
-15
Au
g-15
Jan
-16
Jun-
16
No
v-1
6
Ap
r-17
Sep-
17
Feb-
18
Jul-1
8
Dec
-18
May
-19
Oct
-19
Mar
-20
RBI Repo Rate
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 17 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
4. Exchange Rate – Stable during the month INR appreciated by 1% against the USD during the month. This was driven by (1) Overall global dollar weakness, (2) India’s current account surplus and (3) Positive net portfolio flows. Depreciating dollar has been one of the prime reasons for the bumper risk-on rally in the Indian markets. As we have noted earlier, there is a strong negative correlation of NIFTY movement with INR deprecation in the short term. Roughly at the time markets bottomed (23rd March), INR had depreciated by almost 7% before bouncing back as stock markets also rallied. It is worthwhile to note that the Rupee would have likely appreciated sharply had it not been for the RBI. India’s current account went into surplus in Q4FY20 (Exhibit 46) for the first time in 10 years. This was driven by fall in oil prices and subdued oil demand (due to lockdown). Coupled with huge portfolio flows, this would have put immense pressure on Rupee to appreciate. However, RBI has consistently intervened in the Forex market to keep Rupee from appreciating as is evidenced in RBI’s massive buildup of Forex reserve over the past few months (Exhibit 45).
Exhibit 43: Rupee appreciated by 1% against the USD in July
Source: MacroTrends, Finpeg Research
-20
-15
-10
-5
0
5
10
15
20
25
30
0
10
20
30
40
50
60
70
80
05/
99
05/
00
05/
01
05/
02
05/
03
05/
04
05/
05
05/
06
05/
07
05/
08
05/
09
05/
10
05/
11
05/
12
05/
13
05/
14
05/
15
05/
16
05/
17
05/
18
05/
19
05/
20
USD INR
USD/INR USD INR (YoY)
Exhibit 44: Rupee has been depreciated by 5.0% YTD in 2020
Source: MacroTrends, Finpeg Research
-13.00
-8.00
-3.00
2.00
7.00
12.00
17.00
22.00
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
YTD
202
0
Annual USD INR (yoy,%)
INR Depreciation Average Annual Depreciation
Exhibit 45: RBI Forex continues to be above USD 500 billion in July
Source: TradingEconomics
Exhibit 46: India achieved a current account surplus in Q4FY20
Source: TradingEconomics
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 18 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
Global Markets – Mixed bag of a month
1. Global Equity Markets US benchmark index S&P 500 was up 5.51% in June and is now up 1.25% year to date. US tech index NASDAQ is up for 2020 (up 19.76% YTD as of 31st July) and is well above its peak in February. We have covered this tech mania in our cover section. Globally, equity markets had a mixed sort of month. While EMs like India were the best performers on back of risk-on mode triggered by weakening dollar, markets like Japan, UK and Hong Kong were down for the month. If we look at UK markets (FTSE), it is still down 21.8% YTD making it one of the worst performing stock markets. Apart from US, the only other stock market that is up for the year is China. Driven primarily by regulatory support and indication from authorities for supporting the stock market. Again, very close to taking Chinese stocks to bubble territory just like 2015. As we have argued in our cover section, we believe that global markets are rallying on fragile internals and the rally is being driven by a select few stocks. Valuations, in the process, have skyrocketed. In our view, equity returns are likely to remain negative (or low) over the next 6 - 12 months. In fact, at these levels, there is a high probability of sharp correction (or even a crash).
Table 4: Performance of major indices across the world
Indices 1M 3M 6M 12M YTD
S&P 500 5.51% 12.32% 1.41% 9.76% 1.25%
Nasdaq 6.82% 20.88% 17.42% 31.43% 19.76%
Russel 2000 2.71% 12.95% -8.28% -5.98% -11.27%
FTSE -4.41% -0.06% -19.05% -22.26% -21.80%
DAX 0.02% 13.37% -5.15% 1.02% -7.06%
Stoxx 600 -1.11% 4.79% -13.24% -7.63% -14.38%
Nikkei 225 -2.59% 7.51% -6.44% 0.88% -8.23%
Shanghai Composite 10.90% 15.73% 20.51% 12.87% 8.88%
Hang Seng 0.69% -0.20% -6.53% -11.46% -13.15%
NIFTY 7.49% 12.31% -7.43% -0.40% -9.00%
Source: Yahoo Finance, Finpeg Research
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 19 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
2. Global Debt Markets As discussed briefly in our cover section, signal from the bond markets is completely opposite to what Equity markets are telling us. US 10-year yields fell by another 9 bps despite the reflation narrative. German 10-year yields fell by 7 bps and Japanese 10-year yield fell by 2 bps in July. Along with the reflation narrative, we have also had repeated assurances from the FED that they will achieve their 2% inflation target (and allow inflation to overshoot as well). But Bond markets are simply not buying it.
In our last issue, we had mentioned that intervention by Fed in US treasury markets have distorted the price signals that is generally used to read into what is happening with the economy and other asset classes. We however argue that despite this, bond markets are sending out a very distinct and clear signal about the state of the economy ahead. Nothing highlights this signal more than the chart in Exhibit 49 that tracks US 10-Year yields across various QE periods (gray sections). If you notice, bond yields actually increased in QE1 and QE3 signaling an actual economic recovery. In QE2, bond yields kept decreasing (during the Euro zone crisis). Coincidentally, equity markets delivered solid returns in QE 1 and 3 and delivered negative returns during QE2. And if we call the current period as QE4, we have a scenario of falling bond yields (just like QE2) suggesting that the recovery is likely a head fake.
Exhibit 47: US 10-year yields fell by 9 bps in the month of July
Source: Bloomberg
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US 10Y and 3M GSEC yields
US10Y US3M
Exhibit 48: German 10Y GSEC yields fell by 7 bps in the month of July
Source: Bloomberg
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10Y GSEC yields
Germany Japan
Exhibit 49: Bond yields have been falling in this QE unlike QE1 and QE3
Source: Bloomberg
Exhibit 50: Corporate Bond Spread in US over 10Y Treasury
Source: FRED
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Corporate Bond Option-Adjusted Spreads
BBB AAA High Yield
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 20 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
3. Dollar and Gold It was not a good month for Dollar bulls. DXY index fell by 4.1% while trade-weighted dollar index fell by 2.7% implying a broadly weak month for the dollar. Weakening dollar is also one of the prime reasons for global rally in the equity markets. We however note that bulk of the weakness in dollar has been driven by strength of Euro (up 6.25% in July) than anything else. If we compare other DM currencies, the weakness is not that profound (Yen is up 1.9%). Even when compared to EM currencies, dollar weakness is not as bad as Euro. If we look at long-term dollar trends, we will find out that dollar has alternate cycles of strength and weakness. We were so far in a dollar strengthening cycle and with the current bout of weakness, the general consensus is that dollar has peaked, and we are at the start of a weakening cycle. Gold is the new wonder kid What a month it was for Gold. Gold rallied 10.9% in July to close the month at USD 1975/oz. And it did not stop there. As of writing this report, Gold has breached 2000 levels and trading above USD 2050/oz. We at Finpeg, remain bullish on gold from a medium-term perspective. In our view, rampant printing of USD (as well as other major currencies) by Central Banks makes gold very attractive w.r.t fiat currencies. However, the current price action has meant that Gold is now in an overbought territory and we do not rule out a correction in the near term.
Exhibit 51: Dollar index (DXY) fell by 4.1% in July and Trade weighted index fell by 2.7%
Source: FRED, Bloomberg
By 0.7%
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Exhibit 52: Dollar has increased much more on a trade weighted basis
Source: Bloomberg
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Dollar Performance
DXY TWEXB
Exhibit 53: Gold is now trading at its all-time high breaching the record set in 2011
Source: Goldprice.org
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Exhibit 54: Gold has been the best performing asset class since 2000 both in INR and USD terms
Source: Investing.com
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Gold vs NIFTY vs S&P 500
Gold (USD) S&P 500 Gold (INR) NIFTY
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 21 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
Global Macro
1. Global Macro Snapshot Table 5: Overview of major and emerging economies
US Germany Japan UK Euro
GDP (latest) -9.50% -11.70% -1.70% -1.70% -15.0%
Inflation (latest) 0.60% -0.10% 0.10% 0.60% 0.40%
10Y Gsec (latest) 0.52% -0.51% 0.01% 0.13% 0.07%
Central Bank Rates (latest) 0.25% 0.00% -0.10% 0.10% 0.00%
China Indonesia Brazil
GDP (latest) 3.20% -5.32% -0.30%
Inflation (latest) 2.50% 1.54% 2.13%
10Y Gsec (latest) 2.98% 6.80% 6.47%
Central Bank Rates (latest) 3.85% 4.00% 2.00%
As can be seen from the table above, the world has slipped into a deep recession. Most of the developed economies contracted sharply in the quarter ending 30th June and this come on back of contraction in the first quarter as well. Exhibit 56-58 show Manufacturing PMIs for US, Eurozone and China respectively for the month of June. It is worth noting that for the first time since March, PMIs have moved above 50 indicating a month-on-month expansion w.r.t June. However, the numbers are still very modest to suggest any meaningful and secular recovery. Further, cases in US started surging again only in July and slowdown in activity (owing to pause in reopening and local lockdowns) only took effect in the second half of July. At the same time, cases in Europe have started to show early signs of surge which will likely have an impact in August activity. In essence, we have to accept the fact that economies will continue to operate at a much lower activity levels till the threat of the virus is completely eliminated.
Exhibit 55: Sharp contraction in GDP in US and Euro Zone in 2Q while rebound in China
Source: TradingEconomics
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GDP Growth (yoy,%)
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Exhibit 56: US manufacturing PMI moved above 50 in July
Source: Investing.com
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US Manufacturing PMI US PMI (yoy change)
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 22 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
Commodity and energy drive near-term inflationary pressure but deflation remains the more likely scenario Inflation vs deflation seems to be one of the most hotly debated topic in the finance world right now. The actual outcome will likely impact the price action of most asset classes (Equities, Bonds, Gold) in the next 12 – 18 months. Right now, inflation seems to be the consensus view (bolstered by Fed’s repeated assurances) as is evident in rising inflation expectations. If we look at 5-year breakeven inflation in US (Exhibit 61), it has been inching up showing markets increasing conviction about a reflation. 5-year breakeven inflation essentially tells us the market expectation of inflation in next 5 years. We however continue to believe that deflation (in developed economies) and moderate inflation (in India) is the more likely scenario to play out in the next 6-18 months. Inflation hawks point to “unlimited” money printing by Central Banks as the potential fuse for Inflation. However, in doing so, they assume that complex variables like velocity of money and money multiplier are stable. However, both the velocity of money and money multiplier have been falling all through this decade (Exhibit 63 and 64) and nothing in the current economic scenario indicates that they will rise in the near term. As long as these variables don’t rise, inflation is unlikely.
Exhibit 58: Chinese manufacturing PMI was 52.8 in July
Source: Investing.com
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Exhibit 57: Eurozone PMI increased to 51.8 in the month of July
Source: Investing.com
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Eurozone Manufacturing PMI
Eurozone Manufacturing PMI Eurozone PMI (yoy change)
The velocity of money is a measurement of the rate at which money is exchanged in an economy. It is the number of times that money moves from one entity to another. It also refers to how much a unit of currency is used in a given period of time. Simply put, it's the rate at which consumers and businesses in an economy collectively spend money. The velocity of money is usually measured as a ratio of gross domestic product (GDP) to a country's M1 or M2 money supply.
In monetary economics, a money multiplier is one of various closely related ratios of commercial bank money to central bank money (also called the monetary base) under a fractional-reserve banking system. It relates to the maximum amount of commercial bank money that can be created, given a certain amount of central bank money.
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 23 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
Exhibit 60: US Fed brought the rates down by 150 bps in 2 back-to-back emergency cuts
Source: Bloomberg
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Exhibit 59: Inflation inching down globally as oil and commodity prices remain muted
Source: Investing.com
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U.S Germany Japan Eurozone UK China Brazil
Exhibit 62: 5-year 5-year forward inflation expectation also inching up
Source: FRED
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Exhibit 61: 5-year inflation expectation has been inching up
Source: FRED
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Exhibit 64: Money multiplies has also collapsed and unlikely to fuel inflation
Source: FRED
Exhibit 63: Velocity of money has collapsed in the last decade and continues to decline
Source: FRED
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 24 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
Performance Data
1. Best performing Equity Mutual Funds in July 2020
Best Large Cap Funds 1M YTD 1Y
IDFC Large Cap Fund 8.9% -3.2% 5.9%
Edelweiss Large Cap Fund 7.9% -6.9% 2.5%
Invesco India Largecap Fund 7.8% -4.6% 3.6%
Best Multi Cap Funds 1M YTD 1Y
DHFL Pramerica Diversified Equity Fund 11.1% 6.4% 16.0%
Parag Parikh Long Term Equity Fund 9.8% 9.4% 18.7%
Motilal Oswal Multicap 35 Fund 8.1% -8.1% 1.3%
Best Mid Cap Funds 1M YTD 1Y
DHFL Pramerica Midcap Opp Fund 10.2% 10.1% 24.3%
ICICI Pru Midcap Fund 8.3% -10.2% -4.8%
Reliance Growth Fund 7.2% -6.8% 1.8%
Best Small Cap Funds 1M YTD 1Y
Union Small Cap Fund 9.1% -2.8% 11.8%
ICICI Pru Smallcap Fund 6.8% -13.1% -5.1%
Kotak Small Cap Fund 6.5% -6.7% 5.1%
Best Large & Mid Cap Fund 1M YTD 1Y
L&T Large and Midcap Fund 7.3% -7.1% 2.2%
Edelweiss Large & Mid Cap Fund 7.2% -7.7% 2.7%
UTI Core Equity Fund-Reg 6.9% -9.9% -4.9%
Best Focused Fund 1M YTD 1Y
IDFC Focused Equity Fund 10.0% -3.4% 11.3%
Aditya Birla SL Focused Equity Fund 7.2% -8.1% 1.2%
IIFL Focused Equity Fund 7.0% -4.2% 8.7%
Best ELSS Fund 1M YTD 1Y
ICICI Pru Value Discovery Fund 8.6% 1.8% 3.5%
HDFC Capital Builder Value Fund 8.3% -10.2% -4.8%
L&T India Value Fund 7.9% -8.4% -2.3%
The Alpha Investor, July 2020 | Issue #9| Finpeg
- 25 - THE ALPHA INVESTOR, JULY 2020 | ISSUE #9 |
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