MARKET PERSPECTIVE

By J Mulraj

August 17-23, 2024

US job data revised downwards by a whopping 818,000

The US Labour department just reported that the job growth for the 12 month up to March 24 earlier reported by it was overstated by 818,000 jobs. The actual number of jobs created were lower by that number. This is a startling obfuscation of facts and figures. It indicates that the US economy is in worse shape than earlier thought and leads to doubts about the method of data collection, and so its reliability. Even worse is the apparent disfunctioning of different departments of the Government. When asked to comment on the sharp downward revision, Commerce Secretary, Gina Raimando, first blamed Trump for such news, calling it  disinformation! When told that the figure was from Department of Labour, she said ‘I am not familiar with that!’. One arm of Government doesn’t know what another arm is doing?

Perhaps this stunningly lower number of jobs created would buttress the case for an interest rate cut by the Federal Reserve Chairman, J. Powell, at its next meeting in  September. The market expects at least a 25 bips cut. A larger cut would enthuse the market but a 0.25% cut is already baked in. Should there be a sharper correction, it would tend to favor Trump.

Independent candidate, Robert Kennedy has pulled out of the Presidential race and is likely to endorse Trump. Trump’s opponent, VP Kamala Harris, has no big achievements to demonstrate her ability to lead the world’s largest economy; she has, in fact, permitted rampant illegal immigration instead of protecting the border as she was tasked to do. Hopefully there will be a few publicly televised debates between Trump and Harris for the electorate to gauge their economic policies. Harris just announced her intention to seize valid patents if companies did not relent to Government diktat. Such a seizure would be open to litigation, and to public opprobrium in a free society that rewards innovation. Trump, who vows to drastically cut the cost of energy if he were elected, by permitting ‘drill, baby drill’ would, in contrast, be more appealing.

In other news, Germany has decided to ban all further military and financial aid to Ukraine, as per this report. If other countries followed, the Russia Ukraine war would end sooner, as it ought to have, much earlier.

Donald Trump has vowed to swiftly end the Ukraine conflict, if elected as US President in November. He can, and will, by simply cutting off all financial and military aid to Ukraine. It has been a senseless war, completely avoidable. Ukraine has only been able to prolong the fight because of US aid. The prolongation has come at an unaffordable cost – of causing the destruction, even death, of the nation. Ukraine has lost so many of its young male population in the prolonged war that the fertility rate of its female population has fallen much below that needed to sustain a society. And the collective west justifies this decimation of a nation claiming it is in order to preserve democracy! The justification is Kafkaesque.

Last week the BSE Sensex ended at 81,086.21 for a weekly  of  points.

Several countries are in turmoil because of various reasons, including excessive debt, adverse demographic profile, unsustainable expenditure on conflicts or collapse of sectors due to excessively fast expansion, like in the Chinese real estate sector.

Thanks largely to its favourable demographic profile, it’s large domestic market, it’s newfound, and growing, retail appetite for equity investing via SIPs, India is a bright spot amongst global gloom. In June 2024 retail investors committed ₹21,260 crores (USD 2.5 billion) via equity SIP (systematic investment plans). Thanks to this huge inflow, selling pressure is easily absorbed. Ace money manager Vikas Khemani makes a strong case for investing in India in this video presentation promoting his Carnellian Bharat Amritkal fund. He makes a compelling case.

However, India does need to go tough on crime. Incidents like the rape and gruesome torture and murder of a female doctor in Kolkata are unpardonable. For the Government of a State headed by a female to drag their feet on such a dastardly crime on another female is beyond reprehensible, as is the fact that the Centre has not placed the State under President’s rule after such a visible breakdown of law and order. Incidents such as these water down the India story. As does the ease with which politicians caught with huge piles of unaccounted cash face no penalties or punishment. With mounds of dirt shoved under it, the Indian carpet is close to the ceiling.

If PM Modi truly desires to usher in Amritkaal, the most auspicious time to start new work is now. India has the advantage of three Ds – Democracy, Demographics and Drive.

We need a fourth.

Discipline.

Picture source: https://www.nbcnews.com/politics/2024-election/trump-launches-sneaker-line-rcna139334:

Comments may be sent to jmulraj@asiaconverge.com