Saturday, November 29, 2008

Impact on business after Mumbai Terrorist attack

Last three days was one of the worst days in India, as India faced one of the worst terror attacks since Independence. Usually, terrorist just plant the bombs in the crowded market place, and just fled away, but this time terrorist action took everybody for surprise. They collaborated and synchronized their tasks and executed them at 9 different places in the city.

But will this really impact the business in India ?

As based on current intelligence report, the main aim of the terrorist attack was to disrupt Indian economy and portrayed as an unsafe country to do business with. But certainly it will certainly harm business sentiments may be for the short time but it certainly will, the most affected sectors will be Airlines, Tourism, Hospitality.Though the affect will be a short term, as terrorism is now a world wide phenomenon, but in this scenario if India decide to face direct with Pakistan, then certainly it will be bad for the entire nation, which certainly will affect the security condition in India, and will certainly show a negative sentiment for doing business in India. So Indian govt. is really need to take both cautionary and strict measures on their next move, as the entire world is watching.

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Monday, November 24, 2008

Bailout package sanctioned for Citigroup

Last weekend was really dramatic for Citigroup, from announcement of 52,000 job cuts, with high probability of filing for bankruptcy, with chances of acquisition or mergers with other banks on the wall street, with Citigroup shares trading at lowest levels in decades. But somehow, Citigroup felt a sigh of relief, when US fed sanctioned a 20bn $ bailout package, and support to underwrite Citi's multibillion dollar toxic assets. The news of bailout package resulted in surge of Citi's stock, with stock trading at 5.87$ up more than 50 % above the previous closing price.

But the question is Will this fund will be sufficient for Citigroup to survive? Besides, other than question of survival, the bigger question is How these funds will be utilised? I think Mr. Pandit has to revisit on the bank policies, and look out for alternate ways to reduce banks expenditure.

Mohit Kumar
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Sunday, November 23, 2008

Tough Time for Mr. Pandit, Chief Honcho Citigroup

In this year we already saw, some of the major fallout of US financial institutions. The year started with Bear Stearn, and by ht mid of year, it already engulfed some of the oldest financial institutions in US, like Lehman Brothers and brokerage firm Meirrill Lynch. But it seems that fallout year is not yet over, and it may be possible that the next bank in the radar can be Mr. Vikram Pandit, run Citigroup.

On friday, Citi stocks on NYSE were trading below 4 $, making its market capitalization somewhere around 20bn$. Though analyst says that it Citigroup financial status is more sound as compare to other failed financial institutions, but somehow, the Citi's current share price doesnot reflect its financial prowess. Overexposure to subprime loans both in the in Mortgage and Credit Cards Lob, really hurt the bank balance sheets.

CEO of Citigroup, Vikram Pandit, and other officials are meeting US fed officials, in order to rescue Citigroup, before it will be difficult for them to prevent US economy for the Worst Financial Crisis. I hope Mr. Pandit will certainly find a solution, so as to make Wall Street cherish on coming Thanks' Giving.

Mohit Kumar
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Thursday, November 20, 2008

US Auto majors beg for their survival

Detroit, the auto hub of the World, and headquarters of major US auto companies like GM and Ford. But nowever days, Detroit streets have a deserted look, as 3 US Auto majors GM, Ford and Chrysler file for their bankruptcy and requested a 25bn$ bailout pie from Fed approved 700Bn$ economy bailout plan.

Its a very old saying in India, "Behti Ganga mein haath dhona" (Wash your hands in the running waters). This is what these auto companies are doing, they are thinking that as US fed is bailing out banks from the financial crisis , they will certainly bailout them. But the real question at the first time is, Why these auto companies are in such a crisis? These are not the companies who lended subprime loans, but these are the companies who are settled in among the auto loving consumers.
So why they are in such a mess? and why now are they begging for survival?

The answer lies in complete mismangement by the senior management of these firms which leads lavish spending by the senior management and lack of timeley decision. ,and second most important thing is lack of innovation by these auto makers. When world auto markets are demanding more fuel efficient and environmental friendly cars, these auto makers are still developing less efficient cars.

So before they ask fed for the bailout plan, they have to provide a viable plan, how will they are going to use the money, what will be their strategy to increase revenues, how will they leverage in house technology or export new technology from outside world? How will they deal with their competitors? What will be their strategy for the emerging economies? How will they decrease their expenditure? How will they increase their utilization rate?

They have to answer many such What? How? and Why? questions before they really ask US fed for the aid.

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Sunday, November 16, 2008

G20 countries collaborate for Global Financial rescue.

With World Economy shattering and moving towards recession, it had faced in decades. To rescue the World economy from Global slowdown, leaders from the top 20 countries met in Washington on
Saturday to tackle collaboratively on this problem.

The agenda of the meet is to look out for the causes of the Global crisis and the solutions to fix these problems, and a the solutions or strategies to prevent such kind of problems in future.

The G20 nations discussed about the strategies on utilization of stimulus packages, and talked of economic stimulative measures like decreasing interest rates and bailing out banks and financial institutions.

They added that they have to work collaboratively to boost developing economies, which saw the major meltdown in their crisis. They added that if required, the developing economies, fund channeling may be routed through International Monetary Fund(IMF).

Besides, discussing on financial rescue measures, they also discussed on more regulation for financial and capital markets and to improve oversight of Credit rating agencies and to make investor fully aware of the risk involved in complex financial instruments before financial system posses another level of instability.

The international financial mess is already been created and instead of financial rescue plans from key G7 countries, it really calls for a collaborative effort from all the countries, to clean up this mess, before it pose a major threat to World Security.

G20 Countries :
  • Argentina
  • Australia
  • Brazil
  • Britain
  • Canada
  • China
  • European Union
  • France
  • Germany
  • India
  • Indonesia
  • Italy
  • Japan
  • Mexico
  • Russia
  • South Africa
  • Saudi Arabia
  • South Korea
  • Turkey
  • United States

Mohit Kumar
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Wednesday, November 12, 2008

Biofuels viabilty as a future fuel?

Biofuels are often considered alternative to both petrol and diesel, terms of price, environment and low production cost. Though somehow now the price of crude oil is moving around 55-60$ (NYMEX) per barrel, which is considerably down when compare to 147$ six months ago. With fear of global recession the price of lowered to considerable low level, but as when global economy again take an upward, analyst crude price prediction of 200$ will then not be a distant dream, at that time the more price sensitive Biofuels will come into picture.

Besides, apart from alternative to fossil fuels, Biofuels also are economical on may fronts, environment, foreign exchange, self reliance, energy sufficient and security.

Mohit Kumar
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Tuesday, November 11, 2008

Amex changed its profile

Amidst the financial crisis clouds, American Express, popularly known as Amex, decided to change its line of business from Credit cards, Business services and Travel Services to more traditional commercial banking operations. Thus, after Goldman Sachs and Morgan Stanley, Amex becomes the third bank on Wall Street to change its banking status.

The move will give Amex to increase their deposits- a more stable form of funding, besides it will easily get the more safer access of fed funding and will be under constant scanner of Fed.

Amex (AXP) stocks fell to around 22$ during the Mid-Day trading.

Mohit Kumar
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Monday, November 10, 2008

China billion dollar economy stimulus package

It's often said, when going gets tough, the tough gets going. But in this economy crisis, even the toughest of all economies failed to survive. China announces a 586 bn$ economy package, which they will spend in coming years in building country's infrastructure and also smooth line lending process in the country financial system.

Though the news of economy stimulus helped stocks surge in Asian economies, while the same news caused stocks plunge in the US markets, with US stocks dropped as a worsening outlook from companies like Glodman Sachs and Google Inc.

Lets wait and see how this economic stimulus package will help revival of the Chinese economy.

Mohit Kumar
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Sunday, November 9, 2008

Feeling the financial Pain by BRIC

BRIC, acronym stands for Brazil, Russia , India and China basically one of the highest growing economy in the recent times, and according to some of the industry experts in coming years, may become biggest economies in the World.

But recent financial crisis in US and Europe recently affected this BRIC economies, while stock markets in this region have almost lost their 50% of their valuations in recent times. Liquidity crisis, credit crunch, inflation , unemployment, layoffs, bad consumer sentiments are looming all over this BRIC economies, thus forming a bad time for these economies.

But this financial crisis, really helped these BRIC industries to remove themselves from the dependencies of developed economies, and instead of more export centric, try to build their own domestic consumption, diversify their business, develop an inhouse R&D facilities.

Though it will be difficult to keep themselves aloof in this flat world, but it will certainly help them to move smoothly in this financial crisis.

Mohit Kumar
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Saturday, November 8, 2008

Obama Solution to Economy Crisis : Greener Energy

After Mr. Obama defeated Mr. Mcain and marked his place as the 44th US President. With the winning of the US presidential race, the next big task which revolves around the new president is revival of the economy and creation of new jobs. While US employment rate is at 14 year low, at 6.5%, the creation of new jobs in this difficult times is really a difficult times.

To all the economy crisis, Obama solution is patronage of Greener Energy soltuions, which included building of Wind Turbines, fitting of solar cells units, leveraging of technolgy in building environmental friendly coal.With inclusion of such a new initiatives he pointed that it will create around 5 million jobs.But the question is where will the funding of such plans will come from? Will the govt. once again put additional tax on the tax payers, and raised the required fund? But raising tax again means, making Obama unfavorable among US voters. So this will be the last thing the new preisdent and his transition team will think of. But currently Obama is pursuing to implement its Cap and trade plan, under which Govt. will auction permit to companies, and with every successive year it will reduce permits, thus reducing the Greenhouse gas emission in the atmosphere. The money generated with this auction will be used for more job creation.

Though Obama greener plans currently sounds more oppurtnistic and in favor of the economy, but lets see what will happen next, when he will put this plans into execution.

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Thursday, November 6, 2008

Tough task ahead for Mr. Obama

Ex-Senator of Illinois state, and now the 44th president of United State, the African American Barack Obama will join Us presidential office 10 weeks from now. But it will certainly will not be an easy power transition from Mr. Bush to Mr. Obama.

Some of the key task which the new president have to take care, after he take over the office from Mr. Bush.

1. Economy Revival : Implement new strategies to revive the economy.

2. Maintain peace in the Gulf region .

3. Form strategies and policies to improve situation is Iraq and Afghanistan.

4. Try to form cordial relations with Iran and North Korea, and look out ways to check on their Nuclear ambition.

5. Play a big daddy role in improving bilateral ties between India and Pakistan.

6. Reduce tensions with Russia regarding deployment of Anti-Missile system in Europe.

7. Reduce unemployment figures.

8. Improve health condition of Americans.

9. Work on world peace.

10. Take measures to prevent Global Recession.

Mohit Kumar
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Tuesday, November 4, 2008

US stock surges on Election Day

As US 2008 presidential candidate is on the brink, while on one side US voters putting their votes in the ballot boxes, on the other side, US investors came back to bourses, with US stocks surges by more than 300 point on the election day. The Energy and the banking shares were the front end shares in today's rally. The S&P 500 added app. 40 points and closes above 1000 points, while Dow Jones Industrial Index settled above 9600 points. Some Wall Street analysts also pointed out that the Armageddon of Crisis is over, with market may see some better days ahead. But from my opinion, the state of crisis is still not over, this may be short bull run in this highly volatile scenario, and with change of leadership in the US politics may helped bull to come out from the den, but still its a long way to go before market will be in a position to move on smoothly.


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Monday, November 3, 2008

Upheaval task for new US president.

With every passing day, the US presidential race become more exciting, sometimes election polls favored Obama, while next time election poll pendulum moved towards Mcain. But whoever win the US 08 presidential election, it will be certainly a sleepless night for them. As first and foremost task for the new president will be US economy revival from the current Financial crisis, secondly he have to bring back investors back to Capital Market, and make world believe in the sanctity of the US financial system. Besides, they have to make sure that 700bn$ bailout package sanctioned by Bush administration should be spent in a proper way, and try to return money to already oppressed US taxpayers.

Lets wait and see how new US president will formulate his policies.

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Sunday, November 2, 2008

More Job Cuts in this Financial Downturn

With financial crisis and the fear of global recession engulf everybody in the world. With financial crisis there are some sectors which are more vulnerable to job cuts.

Some industirs which will suffer the most :

1. Housing : The sector which was the root cause the worst financial crisis after 1929, Great Depression, is now also the most vulnerable in terms of job lost, and will witness more layoff in days to come. Jobs which are more vulnerable in housing sectors are Mortgage brokers, homemakers, mortgage lenders, commercial real estate and real state agencies.

2. Financial : After housing , financial people found their jobs more un-secure in this crisis. With stock market tumbling world over, and no body in the financial markets are lending money to each other, which leads to a bad business for banks and the financial sectors and thus may result in more job cuts.

3. Retail : Even before the financial crisis, retailers were railing with the rising oil prices and rising inflation, which kept the customers out of shopping counters. But after the financial crisis, the thing seems to even worsen for the retailers, with more layoff looking over different sectors, and people want to cut on their spending, in order to save money for the worst time ahead. As more and more customers, spending less, which means hard time for retailers.

4. Autos : Just like retail, first it was oil and now its liquidity crunch which is falling on the revenue of the auto majors in the industry. While sales at big three automakers had already taken a hit this year, and prediction is not that good for the last quarter, which may leads to more job cut in this sector also.

5. Travel : Airline sectors have already started layoff before the crisis, and after the crisis, with customer liked to save their money and corporates liked to cut costs by leveraging technology which kept their employees from traveling. So as less people travel this season, which means more layoff in this industry.

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