Market Munch🍕 | 30 July 2022
Private equity fancies India's banking sector, US inflation keeps the Fed under pressure, and the big boys of Oil have a profit party.
Good morning Munchers!
Here is your daily dose of the news that matters, from Wall Street to Dalal Street - in 5 minutes and 14 seconds.
Let’s dive in.
What’s hot, what’s not?
Market Commentary
US Stocks had their best month since November 2020 - closing up 9.1%.
Biggest pushes were because of bumper tech and energy earnings - but also because the Fed might have to slow monetary tightening over disappointing GDP data.
Indian stocks also had a bumper month, closing up 10%. Similar reasons - stronger earnings, and hopes of weak policy in the future.
Story Roundup
1 - US wages and inflation figures keep the Fed on their toes. 🏃♂️
Two of the preferred inflation gauges by the Fed printed yesterday - and it’s keeping them under pressure.
June personal consumption expenditures (PCE) rose 1% - which shows that consumers are having to pay more for the same things.
The culprit? You guessed it. Inflation.
This brings annual consumer spending increases to 6.8% - which is well above the Fed’s target of 2%.
Look’s like the Fed’s got a long game of catch-up to play.
2 - Oil giants crush profit records over price surges. 🛢️💸
ExxonMobil and Chevron both smashed their own profit records this quarter - reflecting a tight global market with a lot of demand.
This comes as the price of oil soared past $120/barrel - showing bumper demand despite falling since then.
Outlook for big oil producers however, has reduced in the last few weeks as global central bankers try to fight inflation - rapidly raising interest rates to slow the economy. This also slows demand - hurting oil companies who have enjoyed high prices for a while now.
Politicians are attacking this record profit (as usual) - and Joe Biden said that “Exxon was making more money than God.”😐
It’s a slippery slope that we’re on.🤷
3 - Private Equity takes a bite out of India’s banking scene. 🏦
PE giants Carlyle and Advent International will each acquire “up to 10%” in Yes Bank - one of India’s largest banks.
The deal is valued at about $1.2bn and is subject to the approval of regulators on Aug 24.
It’s yet another bet from the big boys on the future growth of India as a country - projected by many to become a $10tr economy by 2030.
Yes Bank is well placed to grow their transaction banking and digital payments arms - but the controversy that riddled them is still a mar on their image.
Interesting times
4 - Ambani’s $2.3bn plan to make batteries in India.⚡
India’s 2nd richest man Mukesh Ambani is planning to produce batteries right at home - along with Ola Electric (the EV subsidiary of India’s Uber)
This comes as India tries to expedite their slow adoption of EVs - so the government’s handing subsidies of $2.3bn to producers .
Making batteries at home also means that they’re cheaper - since batteries are undoubtedly the most expensive part of an EV.
Electrifying. 🔋
5 - Is the US really in a recession? 📉
The day before, GDP growth in the world’s largest economy was negative for two successive quarters.
By definition, this puts us in a “technical” recession.
However, a lot of people are arguing that it’s not an official one.
GDP figures are revised three times - so this one needs to be taken with “a grain of salt” according to the US Fed’s chair Jerome Powell.
A few economists are sticking to the view that the US economy can avoid the outcome of a full-blown recession.
The NBER - National Bureau of Economic Research - is the body that officially defines a recession.
Hopefully no FUD until they step in. 😉
Aaaand that’s a wrap.
Happy weekend guys.
Thanks a ton for reading. Hope you enjoyed it. Any feedback is open - positive or negative. Hit my line at aryaansh.rathore@gmail.com or https://www.linkedin.com/in/aryaansh/.