Seeking Alpha by Adding Beta

Markets are having a record breaking dream run of 7 weeks of positive returns since Nov CPI report came out. Last week's Fed meeting confirmed already well known fact that interest rates have peaked and there are at least 3 rate cuts coming in 2024. Economy feels like "Goldilocks" economy - not too hot, not too cold...it's just perfect the way Goldilocks would have liked. Let's look at some of the key economic indicators. Unemployment dipped to 3.7% but wage growth has slowed down. Good Inflation dipped to 3.1% and all indicators pointing to further reduction. In fact if recent declining hosing rents are taken into account, the inflation may already be closer to 2.5%. Good Earnings were better than expected. Good Q3 GDP report was hot but Oct/Nov trends show that there is slowdown coming but enough to cause recession. Good Holiday shopping season had good start. Good Interest rates coming down. Fed is indicating 3 rate cuts. Good Small caps have finally started ca

I imagined today' day (Nov 19, 2023) little differently than what it turned out to be..had a watch gathering at my place with few friends for India vs Aus ICC Cricket World Cup Final. Both teams deserved to be in the final - India winning all games in this tournament and Aus winning last 8 games after initially losing 2 games at start of tournament. The match was being played at the biggest stadium in the world (over 132,000 capacity) and over billion people tuning in...maybe most watched single sports event ever. After Australia won the toss, they choose to field (that's what most likely India wanted). India started well but then wickets kept dropping and India ended with total of 240 all out. That's when all of us knew that the dream of winning third world cup is over...despite one of the best bowling squad India ever had....The score was just not enough even for the best bowling to defend against one of the most professional and mentally strong team....No wonder Australi

If you have been following most watched tournament in the World, you would have guessed what today's title mean. Yes - it's about Cricket World Cup. India made history by beating then World Champion - West Indies in 1983. Repeated history again by beating stalwarts like Australia and England in 2011. In 2023 World Cup,  India has not lost a single game (out of 8) and is sitting at top of the table. Indian batting and more importantly Indian bowling have dominated this world cup. One more league match remaining. But semifinals are already decided. India would be playing New Zealand in semi and South Africa and Australia will face each other in other semi. Final would be played on Nov 19.  I am hoping and praying that India continues her dominance and win semi first and then win final to claim 3rd World Cup tille and repeat the history again in 2023!  And like SuperBowl indicator, let's look at Cricket World Cup Indicatior  Last two times India won Cricket World Cup, markets

September kept up its reputation of worst performing month for stock markets (October gets the bad press due to major crashes but its not even in top 3 worst performing months). Why Sept? It could be a good topic for Behavior Economics PhD - I am sure someone must have done some thesis on this. S&P fell by 4.9% while Nasdaq fell by 5.9%. While markets are still meaningfully up for the year thanks to performance of Magnificent Seven (new combo post FANG), what's in store for last quarter of 2023? That would mostly depends on two factors - direction of inflation and interest rates. And continuation of AI momentum - sizzle or fizzle? For today,  let's focus on first factor. Fed Chairman Powell's in-famous comment about "Inflation is transitory" caused major credibility loss for Federal Reserve. Since then Fed is doing everything to make sure that markets get the message that they are serious on bringing down inflation. Based on latest readings they are reasonably

First - Happy Independence Day for India (Aug 15) and Pakistan (Aug 14). Last week was historical week for Indian Film industry which collected over $100 M on box-office and brought in millions of people to movie theaters with releases like Gadar2, OMG2 and Jailer. I happen to see all three of them. They are decent crowd-pleasers - the main stars in all of them are over 55. In particular I liked OMG2 in the way a difficult topic such as need for sex-education in Indian schools was presented. Pankaj Tripathi's performance is outstanding.  Now onto three "i" factors  The usual pattern of markets going downwards or sideways is on display during the dog days of summer...The earnings season is about to wrap up and by most accounts earnings were quite ok as compared to expectations. The companies which beat got rewarded and companies which miss got penalized...nothing new. But despite initial reactions, many stocks gave up all their days due to continued upward march of interes

About 2 years back coming out of COVID pandemic, I wrote blog titled " New Roarin' 20s.."  It covered what happened in 1920s and what are the factors now which would trigger new roaring 20s. Do check out the blog...almost all factors are valid even now. 2022 went sideways due to inflation pressures which triggered historical steep rate hikes by central banks which led to tech companies taking more measured approach and laying off 200,000 employees....all of that changed in Nov'22 when ChatGPT was launched...even though I had mentioned AI/ML as one of the factor in my previous blog, ChatGPT really captured the imagination of the world and changed the outlook of AI instantly similar to what Netscape did with the Internet and iPhone did with the mobile. The singular concept of "Language is the Interface" made AI accessible instantly to billions of normal people....And now without mentioning AI, no talk starts or ends in tech world..and despite onsite of most-aw

Today morning I went for my usual walk to neighborhood Farmer's market - it was pleasant cool spring morning with fog/clouds on the Evergreen hills! After brisk walk rewarded by bagel and Cappuccino, started thinking of last week's flurry of earnings results by tech giants, potential seizure of First Republic by FDIC and general direction of economy...that's the premise of this blog! Last two weeks tech giants except Apple and Nvidia have reported. Here is quick report-card Tesla: OK but markets did not like constant price cuts to stimulate demand Alphabet: Earnings were good especially with GCP reporting profits first time. Google Cloud is about 11-12% of revenues and 25% of cost but growing at 20-30%. Clearly established itself as 3rd option. Markets would have preferred more clarity on cost cutting and plans to get into leadership position in Generative AI. So stock reaction was muted Microsoft: It delivered on all fronts with Azure still growing at 27%, buzz with OpenAI

First quarter of 2023 is over and it was quite an interesting one with so many unexpected events...almost similar to first quarters of past few years...Markets don't like unpexcted events - so it was surprising that with so many expected events, markets did pretty well especially Nasdaq with double digit gains. What's in store for rest of 2023...for that let's look at some ABC...factors! A I: ChatGPT and followup GPT-4 captured the imagination of world in just few months and revived the excitement around AI similar to what Netscape did for Internet and iPhone did for mobile. Those two events marked the pivotal moments and changed the world and lives of billions of people forever. It's still too early for AI to decide if this is indeed such moment...we will know that in next decade or two. But for now there is definitely lots of excitement with every company jumping onto the bandwagon of AI to project that they are not left behind...Companies which would benefit from thi

What a week of events - no one would have predicted that the 16th largest bank in USA (Silicon Valley Bank) would be no more in less than 48 hours....almost exactly 15 years after the events of Bear Sterns collapse...While one more (again California) bank failed (Silvergate) no one shed any tears due to its high-risk ties to Crypto world...But SVB was no small bank...in fact it was the "go to" bank for last 40 years for startups, VC and many Silicon Valley companies... but what started as typical course of action - upcoming rating downgrade due to loss on treasury holdings, attempt to raise funds to cover capital requirements turn into classic bank run as depicted in  all time classic 1946 movie "It's wonderful life"...Only this time it was not a small town bank..it was one of the premier bank in most innovative place on the Earth...maybe that's what caused its downfall...it was bank for VCs and startups and they exited in droves with slightest doubt and mov

It's that Sunday of the year when all of America is in party mood no matter what's happening in the nation or around the world. Super Bowl is one event which had helped Americans forgot the gloomy news of 2001 dot-com bust, 2009 great recession and recently pandemic induced lockdowns. Over 100 million Americans would be tuned to TV with family and friends and enjoying the much deserved matchup - Colts vs Chiefs. This is also significant in terms of generational shift. It's first time when the baton of quarterbacks would be passed from likes of Tom Brady/Aaron Rodgers to young, energetic African-Americans - Jalen Hurts (Age 24) and Patrick Mahomes (Age: 27). Their styles, risk-taking attitudes and running should make this an exciting matchup.  And when it comes to economic impact of Super Bowl - here are some numbers: Boost to local economy of host city Phoenix is going to be around $600-700M 325 million gallons of beer would be consumed on Super Bowl day - that's almost

First of all, Happy New Year...Due to holiday travels my new year blog got delayed..it's about time to write first blog of the new year...and last two weeks of action in markets, inflation and general economy definitely deserve a look and make some predictions for what's ahead in 2023. What a change on the calendar makes a difference in sentiment...technically year change should not matter ..it's abstract boundary created by humans to manage their life...animals don't have any calendar year..they have only seasons..but humans also invest in markets and somehow change of year makes change in psych of investors..as if all the worries of 2022 are over and it's new start. Well if it helps change the sentiment, I am all for it every now and then! Let's look at some of the trends and make some predictions. Inflation trend is definitely downwards and it can reach near desired fed target of 2% - at least when it comes to core CPI. I won't be surprised that by end of