Land of hope and baloney

The Indian stock market is rallying on expectations of a Modi victory.  Shares have risen 17% in three months.  Rodham Desai of Morgan Stanley is quoted in the FT as saying, "the market has turned hugely exuberant; there is a big hope that this incoming government will fix all of the country's macroeconomic problems.” 

The European defense industry is still downsizing even as global threats increase.

 Airbus is restructuring and cutting 5,800 defense jobs in response to a steep reduction in European defense spending.  It would appear that Europe is not particularly worried about security despite events in Ukraine.  Will this change?

Chinese housing: Built to last but likely to diminish

Residential construction is currently 23% of Chinese GDP.  (In the US it is 3.1%) The Chinese build houses and apartments of cement, and China produced more cement in 2011 and 2012 than the US did in the entire 20th century, according to China’s statistical agency.  But the economy is slowing. Electricity consumption was up only 4.4% in April. Curious though it is, the government has taken no stimulus measures.  One suspects the authorities want a slowdown.

Do Americans love their mothers?

­The National Retail Federation says Americans spent $29 bn on Mother's Day gifts this year. That’s only $300/mother.

Thank you, Federal Reserve, for the easy money

Ethiopia got its first credit rating: Fitch B, S&P B, Moody's B1. The economy is said to be growing at a 10% rate and the country is planning to issue a Eurobond.

Confucius says: “Even the seizure of the largest hydrocarbon resource must begin with a single offshore oil rig.”

China has moved an offshore rig into waters off Vietnam. Vessels of the two countries have been harassing each other. In December China state TV aired an eight part documentary proving it owns the seas within the famous “nine-dash line,” which goes up to the shores of Vietnam, the Philippines, Malaysia, and other countries.

The mouse that prospers: Why is it that small countries are usually more successful than big ones?

I suppose it is because everyone knows what is going on and consequently there is more accountability and efficiency. Take the Isle of Man, which was profiled in the FT recently. The country has had 29 years of continuous economic growth. It’s the 8th richest country in the world, ahead of the UK. It has a comprehensive welfare state for its 85,000 people. During the crisis the UK cut off its customs revenue sharing with Mann so the Manx are balancing their budget entirely on local revenues from the 10% corporate profit tax on banks, property companies and retailers, and a 20% personal income tax capped at £120,000/person.

How does one invest in Mann? Manx Telecom, recently listed in London. MANX. 162.50p. P/E: 500x. Market Cap: £183 million. Revenues £76 million.