It's that time of year when "scary" October gets over with Halloween and November starts with holiday spirit. This time Diwali also happens to be in November (happens once in approx 3 years). So first of all, Happy Diwali to all my readers! This is the biggest and most joyous festival for "festival crazy" Indians. The festival itself goes on for 5 days but if you combine with Vijadashmi, Navratri and multiple weekends of Dandiya, it feels like we are in this for months. It's also called Festival of Lights! With lights, fireworks (where permitted), sweets, parties with family and friends wearing colorful outfits, it's fun! This time I am also looking forward to seeing Aamir/Amithabh's most awaited film "Thugs of Hindostan" which is releasing day after Diwali. it's MUST WATCH film. Go and see in theaters.
November also brings election season every two years These are mid-term elections but due to unique style and substance of our President Trump, it feels like Presidential election where people are going to vote for President Trump or against him. These mid-terms would be one of the most consequential elections in deciding future direction of country. As I have written in past couple of blogs, I am predicting split congress with house going to Democrats and senate staying with Republicans (I have few lunch bets with friends). It would produce gridlock in Washington which is exactly what we need to stop some of the policies and bring back "Art of Politics (aka compromise)" for good of country.
While markets would love to have status-quo (means Republicans winning both house and senate), it will get used to split government and indeed rally after elections as it has happened majority of times. There is also some sector rotation happening in which money made in tech stocks (FANG) is going into less exciting sectors like utilities. With full employment and relatively stable inflation, Fed would continue to raise rates at least two more times before taking a pause.
What a mess company can get into due to lack of vision and leadership. Who would have thought that in all companies GE who is famously known for producing CEOs for other companies would be in such a mess and would need outsider CEO. General Electric (GE) stock is at 9 year low and reached single digit ($9). It reached low of $6.66 in March 2009. So would it go to that level or has it reached bottom? GE has become a binary investment decision (similar to Valeant - now Bausch Health 2 years back). Would it survive or go bankrupt? Given GE's storied history - it was the only stock to remain in DOW for last 125 years before it got kicked out this year - the company would survive after CEO Larry Culp does cleanup. Return on investment in GE stock should beat returns from S&P over next 2 years. But it would need courage to go thru volatility and uncertainty.
After Diwali, Thanksgiving is not too far! So enjoy your sweets and get ready for Thanksgiving!
/Shyam
November also brings election season every two years These are mid-term elections but due to unique style and substance of our President Trump, it feels like Presidential election where people are going to vote for President Trump or against him. These mid-terms would be one of the most consequential elections in deciding future direction of country. As I have written in past couple of blogs, I am predicting split congress with house going to Democrats and senate staying with Republicans (I have few lunch bets with friends). It would produce gridlock in Washington which is exactly what we need to stop some of the policies and bring back "Art of Politics (aka compromise)" for good of country.
While markets would love to have status-quo (means Republicans winning both house and senate), it will get used to split government and indeed rally after elections as it has happened majority of times. There is also some sector rotation happening in which money made in tech stocks (FANG) is going into less exciting sectors like utilities. With full employment and relatively stable inflation, Fed would continue to raise rates at least two more times before taking a pause.
What a mess company can get into due to lack of vision and leadership. Who would have thought that in all companies GE who is famously known for producing CEOs for other companies would be in such a mess and would need outsider CEO. General Electric (GE) stock is at 9 year low and reached single digit ($9). It reached low of $6.66 in March 2009. So would it go to that level or has it reached bottom? GE has become a binary investment decision (similar to Valeant - now Bausch Health 2 years back). Would it survive or go bankrupt? Given GE's storied history - it was the only stock to remain in DOW for last 125 years before it got kicked out this year - the company would survive after CEO Larry Culp does cleanup. Return on investment in GE stock should beat returns from S&P over next 2 years. But it would need courage to go thru volatility and uncertainty.
After Diwali, Thanksgiving is not too far! So enjoy your sweets and get ready for Thanksgiving!
/Shyam
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