Market Munchđ | 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.
Letâs dive in.
Whatâs hot, whatâs 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. đââď¸
Two of the preferred inflation gauges by the Fed printed yesterday - and itâs 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 Fedâs target of 2%.
Lookâs like the Fedâs got a long game of catch-up to play.
2 - Oil giants crush profit records over price surges. đ˘ď¸đ¸
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 âExxon was making more money than God.âđ
Itâs a slippery slope that weâre on.đ¤ˇ
3 - Private Equity takes a bite out of Indiaâs banking scene. đŚ
PE giants Carlyle and Advent International will each acquire âup to 10%â in Yes Bank - one of Indiaâs largest banks.
The deal is valued at about $1.2bn and is subject to the approval of regulators on Aug 24.
Itâs 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 - Ambaniâs $2.3bn plan to make batteries in India.âĄ
Indiaâs 2nd richest man Mukesh Ambani is planning to produce batteries right at home - along with Ola Electric (the EV subsidiary of Indiaâs Uber)
This comes as India tries to expedite their slow adoption of EVs - so the governmentâs handing subsidies of $2.3bn to producers .
Making batteries at home also means that theyâre cheaper - since batteries are undoubtedly the most expensive part of an EV.
Electrifying. đ
5 - Is the US really in a recession? đ
The day before, GDP growth in the worldâs largest economy was negative for two successive quarters.
By definition, this puts us in a âtechnicalâ recession.
However, a lot of people are arguing that itâs not an official one.
GDP figures are revised three times - so this one needs to be taken with âa grain of saltâ according to the US Fedâs 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. đ
Aaaand thatâs 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/.