Economic Factors Influencing Investment

A couple of news items have me thinking. And frankly, getting a bit agitated. The first was the news that the Kiwisaver gender gap has got worse in the past year. New research from Te Ara Ahunga Ora The Retirement Commission shows a 36 percent gap between the amount men and women are putting into KiwiSaver each year, far outpacing the actual gender pay gap. Men and women are contributing the same percentage of their salaries, but women are disadvantaged by working part-time and taking greater (unpaid) care responsibilities. The other bit of not-unrelated news, is the NZ Herald’s list of top-earning CEOs. Of the top 10 - just one woman. In the 54 CEOs surveyed: seven women. In the immortal words of Carrie Bradshaw: I couldn’t help but wonder… WTF is going on here? How have we not come further? Of those top 10 CEO’s companies, how many are reporting on their gender pay gaps? (The answer, according to the Mind the Gap registry: 4) Is there a relationship between perimenopause/menopause support (or lack of it) and the lack of women in CEO roles in our top organisations? AND between perimenopause/menopause and the Kiwisaver gender gap? I think there might be. We know, for example, from the work of Sarah Hogan who found in her NZIER research that 14% of women said they had to reduce their working hours to manage their menopause symptoms, and 6% had changed roles. Twenty percent of women who experienced symptoms said it would have been helpful to be able to make adjustments, but they never requested any, mostly because of menopause and gendered ageism stigma. All of us who are working in menopause education have heard stories from women who - at a critical stage in their careers in midlife - have made the call to step back rather than step up into senior roles, because of the challenges of menopause and the lack of support for them in their organisations. We have to talk more about this. In fifty years we’ve made so little progress… we REALLY don’t want our granddaughters to be still facing these kinds of shocking statistics in fifty years’ time. 

Use this simple approach to master the Bond Market. Nominal bond yields can be thought of as the interaction between: 1️⃣ Growth expectations 2️⃣ Inflation expectations 3️⃣ Term premium 1. Growth expectations When it comes to economic growth we must consider two angles: structural and cyclical growth. Structural economic growth can be generated through more people joining the labor force (good demographics) and/or through a more productive use of labor and capital (strong productivity trends). The ability of an economy to generate structural growth is an important driver behind long-dated bond yields (strong structural growth = structurally higher long-dated yields and vice versa). Short-term economic cycles also matter for bond yields and particularly at the short-end. Cyclical growth trends are driven by the credit cycle, the fiscal stance, earnings growth, labor market trends and more - the healthier they are, the higher short-end bond yields can be pushed also as a result of a likely tightening from Central Banks that might grow worried about economic over-heating and inflationary pressures in such an environment. 2. Inflation expectations The second component driving nominal bond yields is inflation: but NOT TODAY'S inflation - instead we are referring to long-term inflation expectations. Central Banks might temporarily react to concentrated bursts of inflationary pressures by raising short-term interest rates but when it comes to long-dated bond yields investors will always pay close attention to inflation expectations. That's because consumers and borrowers will tend to make important decisions based on these rather than on volatile short-term trends in inflation. 3. Term premium An investor looking to get fixed income exposure can do that via buying 3-month T-Bills and rolling them each time they mature for the next 10 years. Alternatively, it can decide to purchase 10-year Treasuries today. What's the difference? Interest rate risk! Buying a 10-year bond today rather than rolling T-Bills for the next 10 years exposes investors to risks – term premium compensates for this risk. The lower the uncertainty about growth and inflation down the road, the lower the term premium and vice versa. 💡 The Main Takeaway 💡 If you want to make sense of bond yields, a useful approach to use is to think of them as the result of growth expectations, inflation expectations and term premium. P.S. If you liked this post you'll love my macro research. I share my macro analysis every day with the biggest institutional investors and hedge funds in the world. Get your FREE trial here👇🏼 https://lnkd.in/dyFFJp-z

I’m pleased that President Trump has announced a pause on implementing some of the “reciprocal tariffs” that he announced last week.   In the short-term, tariffs can hurt economic activity. They cause costs to rise, and companies will either absorb those costs, decreasing margins, or pass them on, which will affect pricing and demand. So delaying the tariffs will avoid these short-term impacts.   But we remain in a period of high uncertainty, including the near-term rising risk of an escalating trade war with China. This uncertainty will likely dampen global investment and growth. Every investment decision is based on both risk and return. The large uncertainties in the global trading system have substantially increased risks for most companies.   BCG’s trade and geopolitics experts, put it this way: “Every company, regardless of sector or location, needs to build tariffs and the related uncertainty into its planning and operating model.” In other words, core decision making just got a lot more complicated for business leaders. You can read more from our Global Advantage team on navigating the impact of tariffs: https://lnkd.in/ert8gazK Some companies have already built geopolitical muscle, developing capabilities to anticipate and respond to policy shifts. They’ve set up teams to map out tariff impacts, consider pricing strategies, and work with suppliers to share cost burdens. They should be better positioned to confront the current turbulence and headwinds. But even the leaders of those companies are now asking harder, longer-term questions. All businesses need to understand how sustained high tariffs could affect their supply chains and manufacturing networks—and prepare in advance as much as possible.   Trade battles and higher uncertainty are not what most of us would have wished for, but that’s the world we’re in. Leaders must embed a mindset of resilience grounded in adaptiveness and agility and seek advantage and opportunity amid uncertainty.

It’s one of those rare instances when AMUL’s top man (Jayen Mehta) has got me a little worried about his plans 🙏🙏 In the last few days, Sir has expressed optimism about what Donald Trump’s reciprocal tariffs mean for Indian dairy exports. He has made a case that: - Nearly 50% of the US dairy exports are to places in India's vicinity, including West Asia, North Africa, China, Southeast Asia, Sub Saharan Africa, Japan, and South Korea - Biggest of them, China has imposed 34% retaliatory tariffs on dairy imports from the US and many more countries are expected to follow These markets will need alternate suppliers, for which AMUL is ready and roaring, as per Jayen Sir. .. All of this SOUNDS great. After all, India is the world’s largest milk producer at 230mn tonnes in 2024 (NDDB). But this ‘win’ for dairy farmers spells disaster for crores of Indian households already crushed by skyrocketing milk prices. Here’s the ugly truth: - India’s milk production growth is slowing-down. It crashed to a measly 1% in 2023 from a 5-6% annual average pre-2022 (Department of Animal Husbandry). And 2024 is widely reported to have remained a measly growth year - Meanwhile, costs are spiraling. Fodder prices jumped 20% since 2022, and as per NABARD’s official stats, lumpy skin disease killed ~97k cattle in 2022 alone, slashing yields Result? Procurement prices for dairies like Amul have (as per news reports) almost doubled from Rs 18/litre pre-Covid to Rs 36/litre in 2023, forcing retail milk prices up 15-18% - from Rs 50 to Rs 70/litre in just about 4yrs 🙏🙏 .. With that context, imagine boosting exports. Pushing more exports - say, to China or Southeast Asia - will shrink our already strained and slow-growing supply while demand continues to be gangbusters in domestic market. - More exports mean even less milk at home, driving prices higher. With demand projected at 274 million tonnes by 2032 (Fortune Business Insights), we need a 5mn tonne annual increase—double the current pace. We’re nowhere close! - Yes, exports could bring in millions of dollars annually, boosting dairy farmers and giants like AMUL. But, crores of households, already paying much higher sums for milk, paneer, curd, and ghee, will suffer Thus, as good as it sounds, India’s dairy isn’t ready to ‘feed the world’ when our own people are struggling. Unless production growth increases, this export dream is a nightmare for consumers. .. Check out my WhatsApp communities: 1> With 28k+ members - Biz News+ : https://lnkd.in/gUKkNXPS 2> With 3k+ members - PrimeStuff : https://lnkd.in/g6tc9VNq Also check out my newsletters with ~9k others here: https://linktr.ee/jmundhra Best, Jayant

We tend to think the EV transition is being led by rich countries. That is no longer the case. As electric vehicles pass 25% of global new car sales this year, it is emerging markets that are leapfrogging over more advanced economies. A total of 39 countries have now reached an EV sales share above 10%, up from just four countries in 2019. EV adoption is no longer confined to a small club of rich countries – it is rapidly spreading across all markets. And why is this? In many emerging economies, EVs aren't competing against cheap petrol. They're competing against imported fuel, volatile prices and high running costs. Where electricity is domestically produced, often from hydro, and increasingly from solar and wind, the economics can flip very quickly. That’s why adoption is accelerating fastest in countries that import most of their oil, but already have relatively clean and affordable power. ➡️ Ethiopia, for example, has a power system dominated by hydro. To curb oil imports, it banned ICE vehicle imports in 2024, and EVs reached a 60% share of sales that year. ➡️ Nepal followed a similar path. After cutting import duties to reduce oil dependence, EVs reached a remarkable 76% share of new car sales in 2024. ➡️ And in Vietnam, nearly 40% of new car sales this year have been electric, almost all of them BEVs made by local manufacturer VinFast. It doesn't end there. Thailand, Indonesia, Uruguay, Mexico and Brazil are all seeing EV adoption start to take off. And these countries aren't switching to EVs to meet climate targets – they're doing it because it's the lowest-cost economic choice. If cars are being imported anyway, it makes sense to import ones that are cheaper to run and improve local air quality. This transition is now bottom-up as well as top-down. It's spreading not just across countries, but across segments too, from two-wheelers to buses and delivery vans as well as cars. And that's why the momentum is building so quickly. #energy #renewables #energytransition

The administration’s policies are set to severely diminish the economy, not only for the next few months but for years. The U.S. economy is facing significant challenges stemming from recent trade policies and geopolitical uncertainty. Tariffs and the resulting trade tensions with both allies and competitors have raised concerns about the nation’s safe-haven status—a cornerstone of its economic stability that has historically attracted global investment.   Safe-haven status is built on investor confidence in transparent governance, predictable regulations, and institutional stability. However, the heightened unpredictability of trade policy and interference with Federal Reserve independence have introduced risks that could cost the U.S. economy dearly. Higher Treasury yields, rising borrowing costs, and diminished global confidence in U.S. financial assets are just some of the potential repercussions.   Credit default swap (CDS) spreads on Treasuries—the cost of insuring against default—have been increasing, signaling growing investor unease. The erosion of safe-haven status will weigh heavily on investment, productivity, and living standards in the years ahead unless decisive action is taken to restore stability and confidence.   The trade war has already done serious damage to our safe-haven status, and it will be costly to our economy. But there is still time for the Trump administration to stand down on the war, salvage some of that status, and avoid the worst of the economic repercussions. Just not much time. #globaltrade #fed #tradewar

Why do currencies really move? Not because of rates. Because of gravity. In the FX market, linearity does not exist. Currencies do not follow the neat equations of econometric models, nor do they obediently track interest rate differentials as textbooks suggest. FX is a complex ecosystem shaped by flows, trust, narrative pressure, fear, and central bank intervention. All of this forms an informational field that bends and shifts over time — much like a gravitational field. Currency Gravity Field™, The Quantis Model We have built the Currency Gravity Field™ for global institutional operators, a physical model that represents currency dynamics as a system immersed in an informational gravitational field, where flows respond not merely to price variables but to the overall energetic configuration of the system. In this framework, price is not the primary variable. Instead, we analyze: -the marginal reallocation of global liquidity and its directional bias; -the compression or expansion of carry as a form of potential energy within the system; -the deformation of the trust field, understood as perceived coherence between macro narrative, policy stance, and structural fundamentals; -the erosion of a country’s informational energy, detectable through discontinuities in flows, forwards, and institutional positioning; -the emergence of critical conditions that precede the failure of a currency regime or a peg. These gradients generate genuine zones of attraction- typical of safe‑haven currencies or economies with surplus systemic trust and zones of repulsion, characteristic of structurally fragile currencies, stressed regimes, and carry structures approaching unwind. Dynamically, currency flows do not move along linear symmetries. They follow the gradient of the informational field, sliding toward minima of potential exactly as a mass would under gravity. This demonstrative model visualizes how currency flows evolve within a dynamic informational field. The surface captures variations in informational pressure, while the highlighted instability zone and flow vectors show how capital trajectories naturally converge or diverge depending on the structure of the field. This approach provides a physics-based view of FX risk, beyond traditional econometric models. This is not statistics. It is the physics of complex systems applied to FX.

📣 The era of aluminium surplus is over. 🛑 According to a powerful analysis by Andy Home at Reuters, the global aluminium market is "sleepwalking into the biggest deficits in 20 years." For decades, the market has been defined by excess, but a structural shift is underway. Here’s why: 🇨🇳 China is at Capacity: The world's largest producer (60% of global output) is hitting its government-mandated cap of 45 million tons per year. Their relentless production growth is grinding to a halt. 📉 Inventories are Draining: LME stocks have plummeted from over 3 million tons four years ago to just over 700,000 today. Sanctions are diverting Russian metal to China, further squeezing Western exchange liquidity. ⚡ The Energy Transition is a Double-Edged Sword: Demand is surging from solar and EV sectors, while high energy costs are stifling smelter restarts outside of China (e.g., closures threatened in Mozambique). 🇮🇩 New Supply Can't Keep Up: Hope rests on Indonesia, where Chinese companies are building new smelters. But analysts at Citi project new capacity will fall far short of expectations, reaching only 2.3M tons by 2030 due to high costs and energy challenges. The result? Citi analysts predict prices will need to rise sustainably above $3,000/metric ton (from ~$2,700 today) to prevent a shortage. This isn't just another trader squeeze; it's a fundamental reshaping of the market. The next crisis won't be caused by too much metal, but by too little. #Aluminium #Metals #Commodities #EnergyTransition #SupplyChain #Mining #Economy #Reuters 

CLOs are Cracking: Welcome to the World of Unintended Consequences A big selloff of existing collateralized loan obligations (CLOs), which buy and pool buyout debt, has slowed the issuance of new CLOs. This makes sense - because the selloff pushed down the prices of existing CLOs, that's what investors will buy until issuers price new CLOs more attractively. This in turn has created a headache for banks looking to offload buyout debt they would have gotten off of their balance sheets by repackaging it into new CLOs. This is not a minor issue; CLOs are a ~$1.4 trillion market. Part of the pressure the market is under is by design. CLOs typically pay floating rates, so they yield less when rates look like they might fall faster than previously believed. And because they are backed by debt used to help finance leveraged buyouts, they also have exposure to credit risk. You're seeing the heightened market pressure show up in ETFs that own CLOs. The $20 BN Janus Henderson AAA CLO ETF (JAAA) recently saw nearly $600 MM of withdrawals, the biggest single-day outflow since the fund’s inception in 2020. This alone was enough to put pressure on valuations overall. ETF prices normally trade in line with net-asset values because specialized traders (aka, "authorized participants" / APs) will buy shares of the ETF whenever they drop below the NAV because they can then redeem the ETF with the issuer in exchange for the underlying assets, which they then sell. It's essentially a risk-free profit. But some CLO-focused ETFs are trading at discounts to the value of their portfolios wider than 4%. The fact that the APs are not stepping in to pick up what should be free money makes us wonder how accurate those NAVs are. As the macro environment continues to deteriorate, and at an accelerating rate, the banks looking to offload the loans they made via new CLOs must be going through the same grim math. Needless to say, when even the specialists hesitate to step in, buyer beware... For the full picture, read these very thorough articles by Carmen Arroyo Nieto, Scott Carpenter, and Katie Greifeld: https://lnkd.in/eWBV527F https://lnkd.in/eiFA73Bx #investing #stocks #bonds #CLOs #ETF #stockmarketcrash #tariffs #TradeWar

Are Startup IPOs Truly Creating Wealth—or Just Exit Liquidity for Founders and VCs? India has seen a wave of startup IPOs over the last three years - 23 companies went public, promising innovation, disruption, and wealth creation. But have they truly delivered for investors? Let’s get into the numbers. The Reality Check Winners: Only 7 out of 23 IPOs are trading above their listing price—with an average return of +69%. Compare that to the midcap index, which posted +78% over the same period. Losers: 16 startups have lost value, with an average return of -35%. Meanwhile RIL, the largest large cap, delivered +14% in the same period. The biggest winner? Zaggle (+163%) The biggest loser? IdeaForge (-67%) What’s the reason for heavy losses? Lets cut through the noise and look at a few key examples: 🚨 Paytm (-60%): Three months after its IPO, Paytm hit a massive roadblock when the RBI barred it from onboarding new customers over persistent KYC and compliance issues. While insiders like Vijay have their stock vesting tied to hitting certain valuation milestones, these regulatory setbacks have clearly dented investor confidence. 🚨 Nykaa (-50%): Influenced by heavyweights like KKR, Nykaa listed at a $7bn valuation - 6X of its GMV. Yet, despite all that hype, its annual profit has never surpassed FY21 number of ₹61 Cr. The disconnect between valuation and fundamentals is real. 🚨 Ola Electric (-35%): Ola Electric is wrestling with multiple challenges: mounting customer complaints, leadership exits (yes, both the CMO and CTO have resigned), and a shrinking market share. When rapid scaling meets operational chaos, big ambitions get hit hard. Why Is This Happening in India? 📉Valuation Discipline missing: Startups are going public on sky-high revenue or GMV multiples without a solid path to profitability to back them up. Eventually markets correct this valuation.  📊 Regulatory Uncertainty: India’s regulatory framework is still catching up in sectors like fintech, gig work, and emerging tech, adding extra volatility. 👥 Investor Sentiment: Indian retail investors have little patience for high-risk, unprofitable businesses, which need time and money to stabilise. A little speculation --> A lot of price movement. What Needs to Change? ✅ Founders’ Mindset: Instead of obsessing over “Can we IPO?”, ask yourself, “Should we IPO?” Build sustainable businesses with strong governance systems with a long term view. 🔎 Stronger Governance: Founders should invest in good legal counsel, a solid Chief of Staff, and an independent board that isn’t afraid to call out red flags. 📜 Tighter Regulatory Oversight: Investment banks and SEBI must enforce stricter IPO pricing and disclosure standards to protect retail investors. Final Thoughts At the end of the day, an IPO isn’t just an exit—it’s a transition into long-term public accountability. The harsh reality? Hype fades, but solid fundamentals and hard numbers endure.