Independence Day
such excitement, much wow
Trump’s 50% tariff threat broke the low volatility regime for a couple of weeks, dinging our short-vol beta strategy (previous updates: here, here).
If you use the max-margin required as initial capital and construct an equity curve…
… you are now at a 4% drawdown.
With PM Modi promising a slew of reforms, we should see vol come back down again.
However, as far as vol events go, this doesn’t even qualify as an “event.” India VIX at around 13 is below its long-term average. Going back a year, election results, the budget, and Trump’s Liberation Day tariffs had much larger vol spikes.
Wonder what happens to this strategy if similar spikes were to happen again?
Markets this Week
More here: country ETFs, fixed income, currencies and commodities.
Links
Research
The Impact of Repeated Financial Misinformation on Investments (SSRN)
In an era of digital misinformation, repeated exposure to financial misinformation may systematically shape investor sentiment and behavior. Our findings revealed that financially confident individuals allocate more funds to stocks after repeated exposure to misleading financial news, becoming desensitized to financial risks and triggering a “dip‑buying” signal that prompts action on an investment opportunity. Our work highlights the unintended consequences of repeated financial misinformation, which can paradoxically motivate highly confident consumers to take greater financial risks in pursuit of higher returns.
The choice for and the effect of CEO television interviews after earnings announcements (SSRN)
This study examines the strategic use of CEO television interviews following earnings announcements. We find that the probability of a CEO holding an interview rises with the magnitude of the earnings surprises, particularly negative ones. These interviews help mitigate short-term stock price declines but correlate with weaker future firm performance.
A long-term analysis of research unbundling: implications for research provision and market quality (springer)
This study assesses the long-term effects of MiFID II’s research unbundling rules on investment research provision and stock market quality. We find a decrease in analyst coverage after MiFID II, particularly for large caps, while SMEs remain unaffected. Market quality experiences a decline, with lower trading volume and increased volatility, offset by liquidity improvements for larger firms.
India
S&P upgraded India's long-term sovereign credit rating to 'BBB' from 'BBB-', the first upgrade in 18 years, citing strong economic growth, improved monetary policy credibility, and sustained fiscal consolidation (reuters).
Independence Day 2025: 8 major announcements by PM Modi (etnownews)
The Central Government has proposed moving to a simplified two-slab Goods and Services Tax (GST) structure — standard and merit — with special rates reserved only for select items. (cnbctv18, reuters)
India has proposed more than 40 amendments to its insolvency law, which could impact how recoveries are shared among creditors, decriminalize business failures, allow empires to be broken up, and give the government special powers in cases of public interest (bloomberg, livemint, livemint).
Without bold, sustained governance, our demographic strength could morph into a liability. The time to act is now. But is that going to happen? (newslaundry)
If Trump can bully us, it is because we can be bullied. If the US sees us as less than earlier as a counterpoise to China, it is because we have underperformed in ways that go beyond the rate of economic growth. Fighting Trump can't be India's goal; it is to win the economic war (theprint).
India’s diamond polishing, shrimp, home textile, and carpet industries are likely to see their revenues hit harder by the United States’ latest tariff hike, making exports to America unviable for many Indian companies (livemint).
Fund flows into India's equity mutual funds soared to a record last month. Net flows into equity schemes rose 81% month-on-month (reuters).
How India struggled to regulate Jane Street's money-spinning machine (reuters)
H-1B selection might change from a lottery to a wage-based system. Only jobs in the top two wage groups (3 and 4) will be filled by H-1B workers (timesofindia).
row
Leveraged ETFs: The Hidden Costs That Eat Your Returns (etf)
China-built ships avoid US routes as upcoming port fees roil trade (nikkei)
Trump is pursuing a multipronged strategy to raise prices, suppress consumption, freeze production, and lower productivity in the United States. Trump is engaged in financial nihilism (theatlantic).
Trump’s White House has created a scorecard that rates 553 companies and trade associations on how hard they worked to support and promote his "One Big Beautiful Bill.” (axios)
Immigrant workers seeking employer-sponsored Green Cards in the US now face record delays, averaging 3.4 years, up from 1.9 years in 2016 (indiatoday)
Europe’s ‘happy vassal’ complex (ft)
Frustration mounts as Japan questions details of Trump’s trade ‘deal’ (washingtonpost)
If you read the fine print, the “concessions” from America’s trade partners don’t add up to much (theatlantic).
The phrase "central planning" gets tossed around as a shorthand to describe Trump's trade policies, but it's not quite accurate. That phrase conjures images of bureaucrats armed with charts and committees drawing up regulations. There is very little of that in Trump's world. Those who can afford to make a direct appeal to the president might get a tariff exemption. Everyone else is screwed. In effect, Trump has turned the administrative state into his private machine (reason).
Building trade policy on headline‑driven, ad hoc bargains is an unstable strategy—made more precarious when the very tariffs they hinge on rest on contested executive authority. These arrangements may create the illusion of momentum, but without enforceable commitments or structural durability, they offer little of the stability that comprehensive trade agreements provide (reason).
In China, electricity isn’t even a question. On average, China adds more electricity demand than the entire annual consumption of Germany, every single year. Whole rural provinces are blanketed in rooftop solar, with one province matching the entirety of India’s electricity supply. The country’s reserve margin has never dipped below 80%–100% nationwide, meaning it has consistently maintained at least twice the capacity it needs (fortune).
Almost a million more deaths than births were recorded in Japan last year, representing the steepest annual population decline since government surveys began in 1968 (bbc).
Apple is planning a slate of new devices, including robots, a lifelike version of Siri, a smart speaker with a display and home-security cameras (bloomberg).
AI
A third of Ocado’s orders are already packed by machines, and this is just the start (theverge).
Why LLMs Can't Really Build Software (zed.dev)
AI designs antibiotics for gonorrhoea and MRSA superbugs (bbc)
Meta’s chatbots tell users they are real people and initiate romantic conversations. The company’s policies have treated romantic overtures as a feature of its generative AI products, which are available to users aged 13 and older (reuters).
Cursor’s Problem (docs)
Routine AI use may affect doctors’ tumor diagnostic skills by 20% (timesofindia)
Meme of the Week
