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India Economics Weekly: Economics [Taimur Baig]
We see India entering 2011 with a great deal of interest and goodwill from the
investor world. The country's favourable growth story is well known, and
expectations are for sustained high returns in the short and medium term. We see
ingredients in place for another high growth year, but remain concerned about the
supply/demand dynamic with respect to inflation. We have also reduced our
expectation of major reform initiatives or legislative achievements in the coming
year due to a likely rise in political noise. Still, we see India continue to be one of
the most compelling investment destinations in the world with its rising economic
strength and underlying potential.
Asia Economics Daily: Strong IP growth in India [Kaushik Das]
Given the sharp rebound in October PMI and core infrastructure data, it was
reasonable to expect a sizeable bounce in industrial production for the month,
coming on the heels of a growth rate of just 4.4%yoy in September. Nevertheless,
the 10.8%yoy (1.8%mom) growth rate reported in today's data was higher than
our forecast of 8.5%. The higher-than-expected figure reflected across the board
strength among the key components of industrial production (mining:
+10.9%mom, +6.5%yoy, manufacturing: +0.5%mom, 11.3%yoy, electricity:
+9%mom, +8.8%yoy).
Focus Europe: Outlook 2011 [Mark Wall]
We expect the euro area to be defined once again by the rolling sovereign debt
crisis in 2011. We do not expect markets to improve until the countries for which
there are genuine questions of financial sustainability are offered EU-IMF aid to
finance their adjustments. After Greece and Ireland , we believe this likely only
means Portugal. Spain will have to do more differentiate itself, but a stronger recapitalisation of the banking sector coupled with structural reforms can keep Spain
in the market and out of the EU-IMF umbrella. The ECB may need to lend more
assistance to make sure markets remain functional.
US Economics/Strategy Weekly: Quarterly Economics Update [Joseph
LaVorgna]
In the last week, new information has caused us to consider significant upside
risks to our near and medium-term GDP forecasts. Obviously, a more robust
growth profile would have significant implications for our outlook on inflation,
unemployment and monetary policy, which we discuss in more detail in our
quarterly economic outlook. At minimum, it appears that the economy has finally
transitioned from recovery to expansion, as our current quarter forecast puts
economic output above where it was when the recession began in December
2007.
The Investigator: 2011 – A confluence of positives [Ajay Kapur]
1) The economic cycle is inflecting up. 2) Don't fight the Fed and 3) Don't fight the
Tape at the same time. 4) The US Presidential cycle is supportive. 5) Consensus
Asia EPS growth estimates are too low. 6) Equity valuations look good versus the
alternatives. 7) De-equitization - A US/Europe concept that is supportive of global
equity multiples. Longer-term investors should have aggressively overweight
positions. For the short-term traders out there, US Risk-Love, i.e. sentiment, is at
extremely elevated levels, so we would close the books or wait a few weeks and
see Risk- Love drop slightly to scale in this bullish view for 2011.
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