Gundlach: People want to be told what to think. I don’t

Jeff  Gundalch “I don’t want to be told what to think. And so I figured nobody wants to be told what to think. But indeed, I think almost everybody wants to be told what to think. That creates a tremendous advantage in managing money. Because in that window of time between a fact and people being told what the fact means, you have a window if you’re capable of figuring out what it means – and don’t need to be told what it means – where you can actually act before other people and I found I’ve made a lot of money that way.”

https://citywireusa.com/professional-buyer/news/gundlach-people-want-to-be-told-what-to-think-i-dont/a1168353

 

Violent swings are just warm up

Rick Ackerman writes…Easy come, easy go. AMZN stunned traders with a 135-point gain Thursday from the bombed-out depths of Wednesday’s selloff. Then, after the close, the stock reversed steeply, shedding 180 points and sucking tens of billions of dollars from stock markets in the U.S. and around the world in mere minutes. A disappointing forecast for the holiday season triggered the avalanche, which has abated somewhat this evening, although presumably not for long. Analysts were left guessing about the reasons for the downbeat forecast, but higher pay for warehouse workers was cited by some. Google parent Alphabet (GOOGL) also missed estimates, crashing the stock 118 points, or 11 %, at the same time. The devastation in these two stocks will put the kibosh on the wilding spree that recouped nearly all of the previous day’s huge losses. Evidence continues to mount that the bull market begun in March 2009 is over. If so, the transition from bull market to bear is going to produce some of the wildest price swings traders have ever seen. If what we’ve witnessed lately is just a warm-up for even more-extreme swings as seems likely, we’re in for bumpy ride over the next couple of years.

Below is an article on same topic by Wolf Richter

https://wolfstreet.com/2018/10/25/friday-hasnt-even-started-yet-but-its-already-ugly/

India’s Fiscal Deficit in H1FY19 Reaches 95.3% of FY19 Target vs 91% in FY18

Dhananjay writes…-India H1 net tax revenue at 40.1% of BE was seen to be the lowest since FY15. The growth has slowed to 7.5% yoy. The mop up in indirect tax collection have been much lower than expected at 1.9% yoy growth. Now with excise duty cut on petroleum products, we expect even a lower indirect tax collection – however the pace of expenditure strengthened to 13.5% yoy primarily due to stronger revenue expenditure at 13.8%. While capital expenditure slowed to 10%. -overall states expenditure also remained strong this year- with revenue growing at
14% and capital at 17%

Outlook: scope of fiscal slippage
With deficit reaching over 95% of BE and capital spending also being at 54% of BE, there is a limited room to curtail capital spending to meet the fiscal deficit target of 3.3% of GDP. With petroleum excise cut, higher revenue obligations especially from subsidies, expected lower tax collections on economic growth peaking out in Q1, rising cost are all likely to increase the pressure on fiscal deficit. Also the impending state and general elections might compel the governments to retain the reflationary path, notwithstanding the narrowing fiscal headroom. Earlier GoI announced lowers market borrowing for H2FY19 by Rs 700bn, which we believe will rebalanced by higher other
borrowings. With fiscal deficit likely to exceed the BE, we believe that the overall borrowing will be somewhat higher.
India G Sec yield has softened in recent days (10 year at 7.87%); this we believe is largely on the back of slower credit demand induced by the NBFC turmoil. we think this may be a temporary.

My two cents…. Market is underestimating the extent of Fiscal slippage and I had already written before that Household consumption is also slowing down simultaneously http://worldoutofwhack.com/2018/10/24/india-sales-managers-index-suggest-slowing-growth/ . Govt is caught in a catch 22 situation because slowing consumption in absence of capex will weigh down on revenue collection and there is not enough space left in Fiscal to do extra spending. Expect slowing growth with stubborn inflation

Thoughts and Reflections on Thirty Years in Fund Management

The advice all Portfolio managers need but don’t appreciate

“Never forget your responsibility to the investors who have entrusted you with a portion of their hard earned savings. When the perma-bull strategist at a bulge bracket investment bank is telling you to eke out the final few point of a  rampant bull market even though there could well be 5% upside and 50% downside, try to think about the man or lady who has worked on the checkout at Tesco for years in order to put something by for her retirement. How would they feel if they knew what you were doing? How would it affect them if you did lose half their money? ”

http://www.rwcdr.co.uk/Docs/18.10_RWC_Equity_Income_Investor_Letter_Q3_2018

 

India Macro Meter- Growth Hits a soft Patch

Nirmal Bang writes….Early data for September 2018 indicates that 69.23% of indicators are in positive territory. This is sharply down from 82.9% in August 2018, and the lowest since October 2017 when only 57% of indicators were in positive territory. However, GDP growth in 2QFY19 may still be around the 7.5% mark aided by robust performance in the previous two months. Rural wages are sluggish, while prices of agricultural commodities remain muted. Nevertheless, we expect some support from government spending in an election year. Domestic demand has also hit an air pocket with passenger vehicle sales witnessing a declining trend, while two- wheeler sales have also slowed. The manufacturing sector’s recovery continues to hold up for now, but some slowdown seems inevitable. The Nikkei manufacturing PMI stood at 52.2 in September 2018, slightly better than 51.7 in the previous month. However, capital goods production and capital goods imports are slowing, although still firmly entrenched in positive territory. Exports declined 2.2% YoY in September 2018 on the back of a high base. Yet, export-oriented sectors such as textiles, engineering and pharmaceuticals are reaping some of the benefits of a weak Indian rupee or INR and still robust global demand. It remains to be seen, how long global demand will sustain. Service sector indicators, though largely robust, are also witnessing some soft patches. The Nikkei manufacturing PMI slipped to 51.5 in September 2018 from 50.5 in the previous month. Meanwhile, lending rates are rising, and the pace of increase has accelerated even as inflation continued to undershoot. So far, real interest rates have been trending down, but if inflation continues to be muted and lending rates rise, bank credit growth could also slip, and the slowdown may be protracted. Commercial paper issuance slowed in September 2018, but still up 41.5%YoY.