Sunday, March 23, 2014

Journalist & Tech under threat…We are entering into Intranet society.

India took 90 years to fight for the Independence of India since at that point of time Internet, Smart Phones, Twitter, Google, Facebook and many others social websites did not existed at that time. Technology has helped to increase the awareness and removes the bottle necks of knowledge updating. We Journalist have been able to create revolution among the societies across the globe. Today in a country like India where corruption rules the market is under vigilance of the common people created through media and technology. We journalist and Technology have created revolution into the society which is very clearly evident across the Globe. If today Africa is being treated as an hot investment destination since Journalist and Technology have bridged the Gap of ignorance.

But I am more concerned about the future independency of the Journalism and Technology growth. The recent case of ban being imposed by Turkey on Twitter and even on google raises the voices that government is under severe threat of the independency of the Journalism and Technology growth. It also reveals that our profession and Technology is so powerful that even the governments are scared of its activities.  Earlier this week, Turkey's prime minister promised to "eradicate" the popular service with the help of a court order. "I don't care what the international community says," Recep Tayyip Erdo─čan said at a campaign rally. We all know the reason why it has been banned. This means that we Journalist and Technology need to create secret codes for distribution and circulation of information. The Vietnamese government also framed law relating to the sharing of news online. It effectively bans social sharing of news links on sites like Facebook and other news aggregation platforms.


We have to develop this so that neither the prospective Journalist neither the Technology could be used to track the source of the information flow. It clearly revels that individual countries where corruption is high dictatorship would come into play to control the flow of information. I am more scared that a time very soon will come where even if these sources are being kept alive but at the back end information’s which will keep the image of the government free from any corruption would be circulated. In one word Intranet concept of information dispersal would come into play. If tomorrow any country or government does Genocides then due to ban on information supply formats the world would never come to know the same. In India also we are also under severe threat since in many places Journalist are being treated badly particularly when this election phase is going on. We are yet to come under the threat of banning social sites but this will bring the RTI act under huge demand. Citizens have right to information and if that is being cooked and processed accordingly and provided then where the society would head is question of trillion dollar. We are taking the steps towards Intranet. The responsibilities of the Journalist would be under severe threat once these Intranet societies comes into play. We have to move to the next level of the dispersal of information where coded names will be used and technology would be restricted to access the point of source. These sources will be created exclusively for the Journalist communities so that they remain protected. Well don’t forget we are under cover agents of the society working for the benefit of them.

Wednesday, March 19, 2014

US CASH PILE........PAYMENT OF DEBT


We all know that an economic development of a country happens when investments in to fixed assets and long term cyclic assets creations are being created. We find that Dow Jones achieving new heights of historic levels and US economy is doing pretty well. The word pretty well defines that they are coming out of the recession, unemployment numbers are coming down and consumer sentiments are again back on the street of consumptions. In my research during 2010 when the Dow Jones was climbing the ladder of 12000 I found that US corporate were having a cash pile of around 1.26 triilion dollars at that point of time. Coming to 2014 I find more aggressive piles of cash which are being kept under the bed of the US corporate and they are quite reluctant to invest as they were in 2010. Some of the Key Findings would elaborate the matter very clearly.


  • According to the Department of Commerce, profit margins at U.S. companies in 2013 were are more than 57 percent higher than average over the past 60 years.
  • From 2006 through mid-2013, total cash reserves at U.S. nonfinancial companies (i.e., everything but banks) nearly doubled, rising from $820 billion to $1.48 trillion, an 81 percent increase.
  • Credit ratings company Moody's (MCO) recently estimated that cash levels at the end of 2013 probably hit $1.5 trillion.
  • If further drilling is being applied we find that the top IT players of US industry holds majority of the cash piles. Apple (AAPL), Microsoft (MSFT), Google (GOOG) and Cisco (CSCO), who together possess $345 billion in cash reserves, or about 23 percent of all cash owned by corporate America.
  • The historical phase of US cash piles is more surprising. During the last 10 years it were different. First, cash holdings increased very fast between 2002 and 2004, growing at an annual rate of 19 percent (from $822 billion to $1.17 trillion), then plateaued until the end of 2008. At that point, they rose significantly fast again, growing at an annual rate of 11 percent until 2011 (from $1.18 trillion to $1.62 trillion).

Now the point of analysis is this that why doesn’t the US corporate doesn’t invest this money since that would create new opportunities for the macro economic factors to grow. Today US corporate (Non Financial Companies) earns 11 trillion dollars and stocks cash of around 1.5 trillion dollars which roughly 13%.Now about 60% of [non-financial corporate] cash piles are offshore and subject to as much as 35% tax if brought back to the U.S. Moreover companies grew their cash reserves by $33 billion over the six months from the end of 2012 to mid-2013. Meanwhile, the past 12 months we have seen a $201 billion increase in corporate debt. This means that over the past year at least, companies have increased their debt by a factor of six relative to cash growth. Today, nonfinancial companies have stacked up a staggering $4.8 trillion worth of debt owed to their lenders and bondholders. So what ever cash piles they are having its only to repay the debate over the next 5 years. Please don’t forget that from 2009 to 2014 we are completing 5 years and another 5 years we will have to pay back what we borrowed for a period of 10 years from 2009. According to Moody's data, some $1.53 trillion in nonfinancial corporate debt matures over the next five years, which is actually a bit more than the $1.48 trillion in cash they've got on hand.

One of the prime reason behind holding such high level of cash piles is that US corporate are more uncertain about the recovery process and another prime reason would be that firms with higher uncertainty in their cash flows had higher cash-to-assets ratios. The prime reason behind this kind of cash pile is that for repatriation taxes. Many countries, including the U.S., have a policy of taxing based on their worldwide global income. Particularly, taxes due to the U.S. government from corporations operating abroad are determined by the difference between the taxes already paid abroad and the taxes that U.S. tax rates would be applicable on them. Importantly, such taxation only takes place when earnings are repatriated. Therefore, firms may have incentives to keep foreign earnings abroad. As a consequence, in times of limited foreign investment opportunities and high profitability, these funds are likely to be held abroad in the form of cash.

Well the economy might be growing and Unemployment might be coming but how much stability it has is a big matter of concern. In my next article I will bring out the facts about the consumer sentiments market backed by Real & REEL employment growth in US.

 Written By Indraneel Kripabindu Sen Gupta

Tuesday, March 18, 2014

China the Great Wall of Fall

The next big fall of the global economic credit might go to China where bubbles are created and have been transformed into financial time bombs. Couple of key findings about the economy would raise the browsers of the global economy. The biggest threat would be do the Asian economy since china holds a substantial position in this regard.  Remember that we are just in the initial phase of the Great Collapse.But there is nothing to worry much since China would use the tax payers money to replenish the defaults.
  • Government owned private organizations bond defaults have started happening in China.
  • Shanghai Chaori Solar Energy & Science Technology missed a $12.7 million interest payment on a bond.
  • A few days after the Shanghai Chaori default, a second company, Baoding Tianwei Baobian Electric Co., saw its bonds suspended from trading and its shares fall by the daily limit.
  •  Well a $14.7 million default is tiny in a $9.4 trillion economy and moreover the company in financial straits, is government-owned, so it's not likely to default. Taxpayers money would be paid to revive the books.
  • According to  Thomson Reuters analysis of 945 Chinese companies showed total debt soared by more than 260% to 4.74 trillion yuan ($777.3 billion) in the last five years.
  • The country's corporate debt hit a record $12 trillion at the end of last year, Standard & Poor's estimated, equivalent to 120 percent of gross domestic product. And as the figure accelerates in coming years, it is being  expected that a high level of restructuring and defaults as companies sell assets and undertake mergers in a bid to pay their debts.
  • China’s trust assets surged 46 percent in 2013 to a record 10.9 trillion yuan ($1.8 trillion), underscoring investor interest in products that pay more than bank deposits even as default risks mount.
  •     Haitong Securities, China’s second-largest brokerage, estimates that 5.3 trillion yuan of trust products will come due this year.
  •        About 20 billion yuan of trust products had repayment difficulties in 2012, accounting for 0.27 percent of the industry’s assets at that time according to  the China Trustee Association.
  • China averted its first trust default in at least a decade last month as investors in a 3 billion-yuan high-yield product issued by China Credit Trust Co. were bailed out days before it matured. About 5.3 trillion yuan of trust products will be due this year, up from 3.5 trillion yuan in 2013.
  • But china has already made provisions for this asset bubble by using the tax payers money with 9.06 billion yuan of reserves.
  • This means that even if there is deliberate default then government would replenish them. What a majestic style of financial weapons being used to exploit resources.
  • Well the prime reason behind the growth of this segment is that the trusts offer wealth-management products that channel money from well-to-do Chinese investors to higher-risk businesses that banks normally won't lend to. They've become popular because they offer yields of 9% to 11%.


·         But the mergers would be within the economic powers and less opportunity for the global economy.Above all these the biggest threat is from the trust assets which have been built over the last 5 years. Well before you derive any conclusion from the same get it granted that China might be able to surpass the burden but the real game is that how long they can continue.

In my research I have identified the industries of the issuers, the regions where their businesses are located and the maturity dates of the products. Also the companies who are involved in this game.
Well we are just in the initial phase of an Asian Collapse replicating the western economies. The only difference between US recession and Asian Collapse would be the change of location of the two states.

Written By Indraneel Kripabindu Sen Gupta

Sunday, March 9, 2014

7000 NIFTY is a Trap…Better at 5000.

After a pretty long time I am writing on the Indian capital market. I am compelled to write since I find that this time many investors and my friends are in big dilemma regarding what type of strategy one should adopt to deal with NIFTY levels in the current scenario.This article can be used as a guideline or it can even be cursed since business profits comes under sirk. But I consider that client safety should be the foremost duty before achieving the financial year end targets. I have kept it simple but avoiding the fools traps of valuations and projected valuations here since the situation is intense since Elections are just few days away.

Wrong Short Strategy
There is couple of my observation which would help you to get the possible course of action for the market. We have been expecting that the current NIFTY and Sensex would be poised for a sharp correction and would come to the level of 5200-4800 (in the worst case). Moreover with Indian elections which are nearby should lead to a sharp profit booking as investors would prefer to remain in the side ways. But this thought line is not perfect and is full of disguise which leads to possible losses like one witnessed on 7th March 2014 where short positions were recovered and market went a sharp upward rally.

 First of all the market will not get any correction since retail participation is negligible. Now if retail participation is zero then why the market is not falling? The prime reason for the same is that Big Cats of the market are unable to find buyers and we all know that buyers are the retails ones who start buying when the sentiments are made for selling. But this time this game plan in not happening. Major credit goes to the retail investors since they have become more aware and capable enough to know the false traps of the markets. Internet and Smartphone has upgraded the knowledge of the retails investors. Precisely the market is also backed by few index heavy weights otherwise in real sense the Nifty should have come down to 5000 levels.

Mistakes of Predication…
 The mistakes which we are doing currently are that we are matching our expectation of the market movement with our previous historical behaviors and that’s the place where the timing is getting wrong. We took that in the Month of March 2014 and with advance tax payments before 15th March 2014 would lead to partial profit booking and hence the market would come down. Taking this call retail investors were asked to create short position in the market which finally lead to devastation.
There are two types of possibilities which are ruling the minds of the market players. If the retail participation remains lackluster then much correction would not happen in the recent phase. Much will ride on the election dates taking the cues from the poll expectations. March historical performance may not happen since this time hardly any retails client is having investments in the market. They have already cleared their position long back and they are mostly on the sidelines of the market with cash piles. For the past 2 years we knew that nothing is expected from the market unless the election happens. Hence that profit booking accounting year closure activities might not turn out to be beneficial for the short positions. In fact the Big Cats made money from the short position games played in the recent week. In between some positive news from the global market would keep the sentiments positive which would further lead to a protection for the market not to come down. Hence don’t fall into the trap of short positions since if you create short positions then the BIG Cats wont sell which increases the MTM and which leads to winding up the short positions and leads sharp rally for the market.

On the other side the valuation of 90% of the NIFTY companies are very attractive but the lack of retail confidence is not giving support and will not till the elections are over. Hence don't get into that trap.
Now after this recent sharp rally of 7th March 2014 ,investors who were  the suffers would remain out of the market game for the next 3 months. This leads to a substantial reduction in the retail participation and also more cautious approach for them.

Now coming back to the possibilities if market don’t correct now then much of the correction would happen after elections since its well clear that for UPA 3 to come will be dream just like building home on Mars. For BJP is would be collation government and people would have less faith on that since whoever comes to form the Indian government lack of majority would be big clinch. Hence I would not be surprised that the market makes great correction after elections. I repeat again here that don’t expect what has happened in the previous two elections.

What and How to Move Strategy
A coalition government would keep the market very much under pressure and under tremendous volatility in the coming days. Retail investors would remain on the sidelines from fresh investments but the trap of short position created more mess and more unpredictability for the markets in the coming days. Remember what we have seen previously may not repeat. Market before or during  elections might come to 7000 NIFTY levels so that retail participation confidence is provoked at the same time  Media would be creating lot of hype for the BJP which will be a trap by the BIG Cats. During elections it would quite easy to manipulate the picture of whom is going to form the government and as major focus would be on majority formation and not coalition, hence any news provoking that segment would create investor confidence and market sentiments. These sentiments would spook the market to 7000 levels and creating trap for the retail participation to buy.

I would be happy to join the race of witnessing the market to correct before election and then a consolidation till the final verdict of the Indian government is out. But the current situation hardly instigates this type of thought line. Hence one should be cautious for investments at these points of time. Short term provocations will be their but not short term opportunities.  The markets have got huge potentiality to fill up the GAP UP open of 2000 points of Sensex on 18th May 2009. This gap is yet to be filled and hence we need to be cautious now. We will see correction but for investments purpose we need to have the correction of NIFTY around 5000 levels so that investments can take real meaning.

Its better to wait on the sideline and let the BIG Cats of the market play.
By Indraneel Kripabindu Sen Gupta & Hardik Bhatt

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