Wealocity's musings on what's happening                                                                             Edition 1/ Vol 8/ Jul'17

Fortnightly Newsletter July 22, 2017 Interesting times and More interesting days “There are decades where nothing happens; and there are weeks where decades happen.” - Vladimir Lenin OPEC unity was dealt a blow after Ecuador announced to increase the production, stating it needs the money. This is adding woes to the compliance as more and more fissures appear among them. However, a larger problem seems to defeat the waning resolve to reduce production from an unlikely quarter i.e. the world’s largest energy guzzler, China, set to see lesser than assumed crude processing as it increases the alternate fuels in their mix. In the meanwhile, IEA (International Energy Agency) signaled that it’s less confident of the global commodity market to rebalance as anticipated. Some think that it could take until 2020 for the prices to recover from the lows of a generation. The global stock indices seem to be on fire. The major US indices have had closings at an all-time high for the seventh time this year. What has transpired in these last few months that makes the markets to rise forever. Rate hikes, US Elections, Brexit, the markets had plenty of reasons to stop rising but it has behaved otherwise. So what’s that got into the market that we couldn’t fathom - liquidity. Nope, the US Fed Reserve has been tightening but other central banks like the European Central Bank, The Swiss National Bank and the Bank of Japan have continued their loose purse strings. As per a Forbes report, the Swiss Central bank has been on a rampage to scoop the US stocks and an estimate put it at $80bn through the 1st quarter.  Meanwhile, the Bank of Japan is now among the five largest owners in 81 companies on the Nikkei 225 index and nearly the primary owner in 50 of them. It didn’t stop there, as a recent Invesco poll of currency reserve managers at central banks revealed that 80% of the 18 central banks polled plan to increase their stock holdings. Godspeed, ABOUT WEALOCITY Asses situations both pro-actively and reactively to manoeuvre portfolios offering customised solutions at risk management ArthSamvaad Our Mid-monthly newsletter

Wealocity's perspective on market happenings Monthly Commentary Jun '17

Death of Paris Agreement Trump - Promise on track President Trump is on track of fulfilling his campaign promises to his voters. After many protectionist measures, the environment treaty brokered last year is trashed by the new US administration. This despite the developing economies like India, China, etc. are on a rampage to create new capacities in the renewable space. Not all across the US embraced their President's stand and started to do their own legislations in their cities, communities, etc. UK Election Results Dis'May'- Have the Millennials sought their revenge? That seems to be the case as more youth turned out to vote in favour of Corbyn's Labour party. Also, May could've relied on the very pollsters who predicted Bremain possibility as her 20% lead evaporated to a cut of 13 seats and most importantly pitting her into a minority government. For UK, a harsher Brexit could be a reality now. The 'Gulf' around Qatar When everyone thought the POTUS completed his first major tour of nations - the GCC, on a sane note, a major crisis emerged out and all the fingers lead to Trump. Isn't it a coincidence that the Qatar sanctions were announced just as his air force one took off. Rumours have it that Trump gave a thumbs up to stifle and wipe out Qatar, the pain point for Saudis and the new crown prince's plans. It's an irony for Saudis mention terrorism! The current crisis has the potential to spill beyond the region. Are we heading into a Kuwait situation? Interest Rate Divergence As reflation takes a breather, the approach to interest rates seems to diverge across the Atlantic. While the EU and the rest of the world maintain status quo, the US is looking to increase the interest rates. This FOMC meet this month, could sound on those lines. Though, the growth in employment staggered, the wage growth is eluding. Domestically, RBI is at loggerheads with the Finance Ministry though the former is in a wait-and-watch mode with monsoon season approaching and GST implementation as triggers for a rate cut. What's in it for you: Equity: With no major headwinds and continued fund flows, the equity market has not lost its steam. The near term market is still in the bullish phase and investments could be very opportunistic and staggered with a horizon of 3 years.  Debt: The interest rate dilemma hangs on for any directional change in the fixed income space. Small exposures to hybrid debt is recommended with a 3 year horizon. Commodities: As US ditched the Paris agreement, Crude seems to head nowhere despite the production cuts by OPEC, while the US rate hike could further bounce the greenback the safe heaven seems to lose it's sheen further. Copyright © Wealocity, All rights reserved. Our mailing address is: dreams@wealocity.com Disclaimer: All the views expressed are strictly personal and we recommend consulting your financial advisor for making any investment decisions based on your risk appetite, timelines and goals.

Wealocity's perspective of the market happenings  Monthly Market Commentary

Experiential Luxury A shift in focus from purchasing luxury goods to enjoying services. A common refrain of the past half-decade has been the decline of luxury ‘ownership’ and the rise of luxury ‘experience’. If this is to believed, then we're moving away from permanent, physical object ‘possession’ and ‘personal luxury goods’ into transient, intangible, service-dominated ‘experiential luxury.’ Experiential luxury is one-off and unrepeatable. This makes the moment of experience ever more important.

RBI Monetary Policy Two key aspects of RBI's commentary are: Hawkish inflationary outlook while extremely optimistic about growth in the coming FY; and serious intent to solve the NPA problem of the banks. While sticking to the medium term target of CPI to 4% within a band of +/-2% it flagged multiple risks to inflation. These include the probability of recurrence of El Niño and it's impact on food inflation, 7th pay commission receipts, one-off GST effect and even the farm loan waiver in several states. Rupee Conundrum The rupee rise in the last quarter caught almost all the analysts off-guard, revising the forecasts for the quarter and year. RBI's gauge of the currency's strength puts in the overvalued territory. And it's non-intervention though perplexing is a wise move as any aggressive buying of dollars would only add to the excess liquidity it's trying to suck out through reverse repo rate hike. We see the trend to continue in the medium term. The Syrian War The US has thrown a wrench in to the ongoing Syrian repair, unsure of which nuts and bolts it wants to tighten or loosen. So, this sudden US reaction to an alleged chemical attack by the Assad admin to be considered genuine or a POTUS ploy  to reverse the ever falling approval ratings is unclear. Musings also indicate the sustenance of new tax cuts and hiked spend proposals need more political mileage especially post the failure to replace 'Obamacare'. But this misadventure could add chaos to the Middle East.

What's in it for you: ‘Bull markets are known to be born on pessimism, grown on scepticism, mature on optimism and die on euphoria'  ~ Sir John Templeton.   Equity: The recent political victories have changed the sentiment and is attracting huge inflows both domestic and foreign. At Wealocity, we've used these higher levels to create cash reserves and believe this strategy would help us grab an impending opportunity. Probably time to bet on the infrastructure theme again!    Debt: With the change in RBI stand and the subsequent events, there could be possibilities of profitability in the long papers and hence are interested in the dynamic asset allocation based investment avenues. Crude: The Domestic price would be dependent on the USD parity, though the recent gains in the global prices is a combination of demand (US summer spends) - supply (shutdown in Libya) issues. The current geo-political tone would add more volatility to it. Copyright © Wealocity, All rights reserved. Our mailing address is: dreams@wealocity.com Disclaimer: All the views expressed are strictly personal and we recommend consulting your financial advisor for making any investment decisions based on your risk appetite, timelines and goals.