"Today’s impossibility is tomorrow’s reality"

A lot of noise is there on social media regarding the US and India’s GDP numbers.  A claim is made over the social media that a few leading news portals have misrepresented India’s GDP numbers compared to that of US. This is the picture which is floating all over LinkedIn and Twitter. And regarding US GDP data: Let’s have a brief look at the calculation methodology: What does it mean when we say that US GDP has contracted 9.5 % in the Q1? Assume US GDP to be 100 (April 2020). Now a 9.5% contraction for Q1 2020 means 100*(1-9.5%) = 90.5 Extrapolating it forward, the change in the upcoming quarters will be: Q2 2020: 90.5 * (1-9.5%) = 81.90 Q3 2020: 81.9 * (1-9.5%) = 74.1 Q4 2020: 81.90*(1-9.5%) = 67.1 So, from 100 to 67.1, a difference of -32.9 and when annualized it is -32.9% (Base was 100). If we do the same calculation for India: Now projecting annualized decline numbers for India just like the US: A whooping annual decline of -75%. If we do a Q/Q computation on US GDP data with India

Apart from the stark difference between India's and China's real yield, this graph is also foretelling us the story of the time that is about to come.  If you are an FD/G-Sec investor, the policy rate is the metric you should currently have a look at. The current policy rate in India is 4.00% (Repo Rate). State Bank of India's (SBI) one-year fixed deposit is offering 5.10%. The yields mentioned above are Nominal yields and are without incorporating the effect of inflation. The Retail Inflation (CPI) for June was 6.09% (From 5.84% in March). Though it was mainly driven by the spike in food prices as clearly evident from the steep rise in the Consumer Food Price Index (CFPI) (9.62% July (E), 8.72% June) The RBI’s medium-term inflation target range is 2-6%. It is expected to remain near the upper range for some time. The repo rate is also likely to stay in the 3.5-4.5% range. Investing in a Fixed deposit no longer makes any sense in India. If your investment horizon is longer

This year 2020 will be remembered in global history for a very long time to come. Some boundless imaginations of our wildest dreams have now become a reality. The WTI Crude Oil future became negative, a situation where the cost of one barrel became more than the oil in it. Source: CNBC The clickbait headline of the day is "Crude Oil future collapsed to a historical low of -$37.63 per barrel". Although, I am no crude oil expert, but many people are under the impression that they will get the oil for free and it is a once in a lifetime moment for India. Let's have a brief look at this Crude Oil sudden demise. To begin with, the -$37.63 per barrel is a futures contract price, not a spot market price. If you are LONG a future, then unlike an option, you have to exercise it necessarily. When a futures contract expires, traders must decide whether to take delivery or roll their positions into an upcoming contract. Most of the speculators either go for a rollover or take a profi

The number of people tested Corona positive has just hit the 1 million mark. In India, almost 2000 people have tested positive to date. The entire country is observing a 21 days lockdown and hoping that social distancing along with testing will help to stop Corona completely. The important point to note here is that lockdown and distancing are quite effective at slowing down the virus spread rate and the consequent fatalities but these measures are not a permanent cure for Corona. These measures are just buying us the time to up our health infrastructure so that if there is a surge later, we can handle it without facing any nightmares. Imagine, after a 3-month lockdown one corona vector who was not diagnosed, spreads this infection to others in the community and from there on subsequently to the entire locality (like  #TabilighiJamat  incident), effectively leaving us at the same place where we are currently in. PM Modi announced a 21 days lockdown ending 15th April #Corona  can be p