This week, we decomposed the India VIX index using STL - Seasonal, Trend and irregular components using Loess. Turns out, it has a strong seasonal component when you look through that lens.
Read more here: VIX Seasonality
Markets this Week
HDFC Bank got downgraded by Nomura and got thwacked…
Rumors that Microsoft is reducing Nvidia's H100 chip orders tanked the AI complex…
More here: country ETFs, fixed income, currencies and commodities.
Links
Research
The adoption of cellphones by Keralan fishermen is the most stunning example of the contribution of information technology to market performance. (tweet)
Can Patience Account for Subnational Differences in Student Achievement?
We show that differences in patience are closely related to substantial differences in educational achievement. Patience is strongly positively associated with student achievement, accounting for two-thirds of the achievement variation.
Percentage of 12th Graders Who Have a Drivers' License, Have Ever Tried Alcohol, Who Ever Go on Dates, and Who Worked for Pay at All During the School Year. (researchgate)
On index investing
An exogenous increase in index investing leads to lower information production as measured by Google searches, EDGAR views, and analyst reports, yet price informativeness remains unchanged. These findings are consistent with an equilibrium in which investors choose to gather private information whenever it is profitable. As index investing increases, there are fewer privately-informed active investors (so overall information production drops), but the mix of investors adjusts until the returns to active investing are unchanged. As a result, passive investing does not undermine price efficiency.
Economy
Because they have fewer parts, electric cars can be made with fewer workers than gasoline vehicles. Plants that make mufflers, catalytic converters, fuel injectors and other components that electric cars don’t need will have to be overhauled or shut down. (nytimes)
Europe is relying on global stimulus to save it – that may be a fatal miscalculation. The assumption the bloc can trade its way back to health is a recipe for stagnation. (telegraph)
India plans over $2 billion in incentives to spur local manufacturing in six new sectors including chemicals, shipping containers and inputs for vaccines. (reuters)
Rising women's participation in Indian workforce likely led by distress. (reuters)
US annual births peaked in 2007, childbearing population will peak around 2028. Births are now down -13% from peak, childbearing population begins declining post 2028. Childbearing population will continue to decline until it too is -13% (and will likely keep on falling as long as births keep falling). (tweet)
Investing
Indian government bonds will be included in the Global Bond Index-Emerging Markets index suite, JPMorgan said in a Sept. 21 note. India is expected to reach the maximum weight of 10% in the GBI-EM. Currently, 23 Indian government bonds with a combined nominal value of $330 billion are index-eligible. The inclusion of the IGBs will be staggered over a 10-month period starting June 28, 2024, through March 31, 2025, with an inclusion of 1% weight per month, the note said.
The GBI-EM Global Diversified accounts for $213 billion of the estimated $236 billion benchmarked GBI-EM family of indices, JPMorgan said.
India entering the GBI Global Diversified bond index and other smaller JPM EM indices could prompt overall about $26 billion of passive inflows as a one-off stock adjustment over the scale-in period, while actual flows may be higher, depending on market dynamics, according to Madhavi Arora, lead economist at Emkay.
This is significantly higher than the $3.5 billion invested by foreign investors in Indian debt so far this calendar year.
Airlines are just banks now. They make more money from mileage programs than from flying planes. (theatlantic)
Pretty much every idea in software today was already basically around 20 years ago. Predicting the future is easy, it's just making money that's hard!(thread)
VCs are sometimes viewed as great investors, superior judges of business models & founder qualities. That is not true. With a few exceptions, VCs are more traders than investors, with success based on entry and exit, and gauging momentum. (aswathdamodaran)
A.I.
Large language models are getting better at mimicking human creativity. (technologyreview)
What are all these GPUs being used for? Who is the customer’s customer? How much value needs to be generated for this rapid rate of investment to pay off? (sequoiacap)
Odds & Ends
The commonly-held belief that attempting to suppress negative thoughts is bad for our mental health could be wrong. Psychotherapy could be making things worse for you. (cam.ac.uk)
The Worst Outcome is a Mediocre Success (pivotal)