Hey there, it’s nice to connect with you all after a brief sabbatical.
So let’s talk about a universal basic income for every Indian. Won’t believe? Actually it looks like it is closer to becoming a reality in India sooner than we think. I am sure you would love to read about it.
Plus, I also read some interesting write-ups about how water is emerging as one hell of a business and whether earnings really drive market.
It’s hell lot of a heavy load this week. Enjoy reading and have a great weekend.
Liquid assets: Water, water big business
Popular in Markets
A new item in the ever-growing population of health-conscious people is the elixir of life – water. This simple product of 2 molecules of hydrogen and 1 molecule of oxygen, available easily from our tap has created a new class of asset. Water has been dressed up in countless different forms and sold under the guise of something new and capable of transforming body, mind and soul. Flavoured water, sparkling water, electrolyte-enhanced water, water promising to eliminate cellulite, the list goes on. In fact, Time magazine noted that “water snobbery has replaced wine snobbery as the latest noon-hour recreation. People order their eau by brand name, as they once did scotch”
Water is no longer “simply water”, it has become a commercial blank slate on which any life-enhancing promises can be attached. Sales of bottled water has grown 100 times compared with that in 1980. Over in the last two decades, bottled water has become the fastest-growing drinks market in the world. The global market is expected to reach $280bn by 2020. The Indian bottled water market also looks exciting and is expected to double to around Rs.160 billion by 2018.
Read More
Earnings don’t move market
Stanley Druckermiller, the greatest money manager alive, attribute majority of his success to just one thing.
In Stan’s own words, and I quote, “Earnings don’t move the overall market; it’s the Federal Reserve Board… focus on the central banks and focus on the movement of liquidity… most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets.”
Portfolio managers would want to drown you in the financial jargon, but understand that it is the liquidity that creates the fundamentals and not the other way around. “The problem with easy liquidity is when you have zero money for so long, the marginal benefits you get through consumption greatly diminish, but there’s one thing that doesn’t diminish, which is unintended consequences.”
And now the Fed is trying to both raise the rates and withdraw the liquidity at same time. the consequences will not be good for those who have feasted on excesses for long.
Read more
Mexico’s ATM is spewing a toxic mix
Trump’s win has already made life difficult for Mexico, with his proposal to bring back jobs and build a wall across border, but Mexico’s bigger problem is oil giant PEMEX, which used to contribute up to 6 per cent of the country’s GDP is on death bed after years of mismanagement and corruption.
Pemex forecasts that production will fall to levels not seen since 1980. Given the gathering deterioration in the company’s accounts — including a total debt overhang of around $100 billion — daily production could fall by as much as $1.6 million per day by 2020, Morgan Stanley warns.
In November Pemex reported a $10 billion loss, the biggest quarterly shortfall in company history. The company has now reported $70 billion of accumulated quarterly losses since 2012. The Mexicans are angry and rioting after all a country which still exports crude oil currently spend more of their annual income on fuel than residents of 59 other countries tracked by Bloomberg, due largely to the country’s low salaries and high gasoline consumption.
Read More
Universal basic income: Does it make sense for India?
According to the Basic Income Earth Network, a universal basic income is a “periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.”
In other words, every citizen in the country would be entitled to a periodic payment, regardless of differences in social or economic positions. You wouldn’t have to prove your unemployment status or your socio-economic identity to be eligible for the income.
It is not new for the relatively under-populated west. On January 1, 2017, Finland began a pilot programme aimed at understanding the effects of a basic income. The government decided that it would pay €560 a month for two years to 2,000 unemployed persons, and continue to provide the income even if they find employment.
But could a basic income be suitable for a country like India, where poverty is widespread and which ranks an abysmal 130 on the human development index? Given the financial burden that such a policy could put on the government, would the state’s focus on crucial sectors like health and education take a beating?
Unlike in the west, there are hardly any detailed studies available on how a basic income would function in countries like India, where close to 30 per cent of the population lives below poverty line and where basic services of health and education remain inefficient.
However, universal basic income is closer to becoming a reality in India sooner than we think. As early as October 2016, Chief Economic Advisor Arvind Subramanian confirmed that the idea of offering a regular payment from the state to all citizens regardless of their employment status would make its way to the Economic Survey, which is tabled in Parliament ahead of the Budget.
It is clear, that the government will be suggesting a move towards a basic income sometime soon, rather than as a goal that India’s economic policy should eventually aim for. But implanting universal basic income in a country with among the highest income inequality is going to be a severely complicated and daunting task. As of now, until the Economic Survey is actually tabled, we won’t know for certain what the government even means by ‘basic income.’
Read more
China paves a path for cancer treatment
Chinese lung cancer cases are growing at alarming pace.. it is now the most common type of cancer in the country and its spread has spawned new listings as well as billion-dollar market values for Chinese companies. There are more than 300 million smokers in China. Nearly 30 per cent of adults smoke, including 53 per cent of all men, and that is not the sole reason of rising cancer cases.
The thick haze of pollution blanketing northern China this winter is a grim reminder of this nation’s new growth industry: lung cancer drugs. A Chinese pharma, which sells just one lung cancer drug called Conmana, shot up to as much as $5.6 billion in market value late last year after raising about $110 million in a public offering on the Shenzhen exchange in November.
Lot of private equity money is flowing into treating lung cancer. Gone are the days when prevention used to be better than cure as there is more money in curing the disease than preventing it from happening.
Read More
(Ritesh Jain, formerly a top-ranked fund manager, is the founder of worldoutofwhack.com.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
