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Saturday, September 21st, 2013
relief rally

13 0921 india

Take yourself back a few weeks.  As shown in the last posting, the fear about China was palpable for a time, but the pressure is off for now, and it has been risk-on of late.  The Federal Reserve’s latest move did nothing to dissuade the risk takers.  (In response to its odd move, I was going to write a piece about “the needle and the damage done,” but I was otherwise occupied.)

More recent than the concerns about China were those about India.  From the chart of the last six months you see above, there has been a relief rally there too.

The top chart shows that the rupee has recovered a nice chunk of its recent decline against the dollar (although it is still a substantial loss for a currency for that amount of time).

The middle two show the differences in gold and oil when dominated in dollars and rupees.  Indians have not gotten the benefit of the decline in gold (arguably more important to them than most consumers in the world) and have been hurt worse by the rise in oil.  But the improving currency has lessened the pressure.

At bottom you can see that the SENSEX has rebounded as well, with gains now approaching those of the S&P 500 over the period.

Is this any more than a relief rally?  Could investors in India be carried out in “body bags” as Jeffrey Gundlach has warned?  (Chart:  Bloomberg terminal.)

new issue

Every few weeks, I put together a little digest for institutional investors and others interested in the responsibilities of a prudent fiduciary.  The latest includes a look at the ratification by CalPERS of its ten investment beliefs, evidence of herding among institutional investors, the CFA Institute’s new guidelines on the reporting of investment information (not just performance), and a little about my upcoming presentations.  (You may sign up for future releases or see back issues here.)