Pulse of Commerce Index

Here is another Leading Indicator in which tracks US Economy.

 The Ceridian-UCLA Pulse of Commerce Index™ is based on real-time diesel fuel consumption data for over the road trucking and serves as an indicator of the state and possible future direction of the U.S. economy. By tracking the volume and location of fuel being purchased, the index closely monitors the over the road movement of raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers.

October Month report signals economy is not going in right direction for now.
 Here is the October Report.

The Ceridian-UCLA Pulse of Commerce Index™ (PCI) by the UCLA Anderson School of Management, adjusted for season and for monthly workdays, fell 0.6% in October following a decline of 0.5% in September and a decline of 1.0% in August, which was the first three consecutive months of decline since January 2009, when we were still deep in recession

October is especially important because it is the peak month for holiday shipping, with a seasonal factor of 1.029 compared with 0.978 in November and 0.941 for December. The October decline in the PCI can be summarized in a single word: worry. Worry about the strength of sales in the holiday period has apparently caused a slowdown in trucking in October which might be only a postponement to November if consumers show a little more exuberance.


The PCI this month is disappointing because the growth in the economy in the first three quarters of this year if sustained would have made the holiday even better.The declines in the PCI in the last three months suggest further slowing of growth of industrial production.


There is a one to one relationship of GDP and IIP with PCI and also  PCI report comes before IIP and GDP report . Looks PCI is a Good indicator to keep Track in future

HSBC October Purchasing Managers Index

The latest PMI data pointed to a marked expansion of Indian private sector output. Activity in both the manufacturing and service sectors grew at faster rates in October, with the headline HSBC India Composite PMI posting 58.4, from 56.5 in September

Commenting on the India Services PMI survey, Frederic Neumann, Co-Head of Asian Economics Research at HSBC said:

“India's service sector picked up steam in October, with firms continuing to add jobs. The details, however, suggest that services might cool in the coming months, with new business growth decelerating slightly and backlogs contracting. The RBI may take comfort in the fact that both output and input price pressures are easing, although this is not sufficient to raise a definitive green flag on inflation.”

Key points
• Expansion of new business in the service sector continued to slow.
Contribution of Service Sector to GDP is huge and it might act as drag on 8% growth rate
• Overall employment rose, after remaining unchanged in September.
• Falling charges in services offset an increase in manufacturers’ output prices.
Increase in manufactured product prices will add the already high inflation

 Previous Posts:
hsbc-india-services-pmi-economic.html

Macroeconomic and Monetary Developments --RBI Second Quarter Review

RBI in its 2nd quarter review is more concerned about the inflation  and the capital inflows coming into EME which might lead to currency appreciation and asset price bubbles. Also talks about Current account deficit and Capital Account surplus and going forward how its going to be. One can get a Good understanding of Economics by reading this Report

The output growth of the Indian economy has started to consolidate around the trend
after a sharp recovery and the headline inflation also shows signs of peaking off. Going
forward, various forward looking surveys conducted in the recent period suggest strong
y-o-y growth. The Industrial Outlook Survey of the Reserve Bank also points to
continuation of the growth momentum. The professional forecasters’ survey of the Reserve
Bank registered a marginal upward revision in the GDP growth rate for 2010-11, on the
back of higher growth forecasts for agriculture and services sector. The overall outlook
suggests that notwithstanding some recent moderation in headline inflation, the level of
inflation remains above the comfort level. The Reserve Bank’s policy stance is likely to
be shaped by dual goals of maintaining the growth momentum in an atmosphere of
global uncertainty, while striving to moderate inflation further

Will the Reserve Bank of India (RBI) raise policy rates for the sixth consecutive time this year to tame inflation? Wait for Tomorrow...looks like they are bit uncomfortable in controlling inflation

Market slipped into red at the last hour

Equity Markets closed on bad note by the end of day , today being expiry in F&O was bit amused at the lightening speed by which market changed direction from Green to Red in mater of few mins.

Vertical Drop in Nifty

 And this is what happened at Reliance Counter at around the same time.

 A More Detailed look at the time span and the Volume in Nifty .See the Slide in Nifty started from 2.55 pm.
And also i am bit surprised on the volume in Nifty at the end of day , still i have doubts on the contributions to huge volumes at last few minutes of trading

Here is what happened at the reliance counter at the same time around 2.55 pm , Infact its the other way round , since this slide happened at the reliance counter i believe entire market went into some sort of panic mode for few mins.

 Its obvious since of the all 50 stocks in Nifty50  reliance stock  having maximum weightage in Nifty we can expect this sort of correlation . It only amused me cause being today a expiry day and market tanked in few mins made me to believe that market participants are  trading more in heavily traded and large cap companies.

I haven't seen the rollover into November series may be will try analyze. I guess November will be a Make or Break for Markets.Will try to post another before QE2 comes

QE2 is coming...This November

Now a Days its mostly debated about QE2 across the boards and its implications on world economy.QE2 is nothing but Quantitative Easing a form of monetary stimulus which involves buying bonds from public.

Who is doing this ?  Managing the Federal Reserve's Balance Sheet

The central bank is likely to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months, a measured approach in contrast to purchases of nearly $2 trillion it unveiled during the financial crisis.

 QE1 happened during crisis and they reacted in a number of ways,like purchases and reducing fed rate to near zero (0.25%) etc..

So what will happen if it buys back bonds from public?

The aim is to drive up the prices of long-term bonds, which in turn would push down long-term interest rates. It hopes that would spur more investment and spending and liven up the recovery.

The announcement is expected to be made at the conclusion of a two-day meeting of its policy-making committee next Wednesday.

So what are its implications?

 Growth will stay below trend, inflation below target and unemployment uncomfortably high—albeit with reduced risk of a double dip. For the Fed to come close to fulfilling its dual mandate of full employment and price stability, QE3 or QE4 may be needed in 2011.

 How about EM are like India?

EM is the main focus of the U.S. capital outflow. Leveraged carry-trades may pause for breath now that so much has been priced-in, but the real-money portfolio shift is likely to continue, causing near-term out performance, but sowing the seeds of future bubbles.

The talk of Fed going for QE2 brought huge inflows into indian Equity markets with FIIs investing a record $6.11 billion in October 

"FIIs see better rate of returns in emerging markets and India is set to attract a disproportionate share of inflows," Reliance Mutual Fund's head of equities Sunil Singhania said

 But with this FII flows its  obvious that rupee will appreciate and this inturn will hinder growth in exports which can be a cause of worry in near future.

           No FII inflow cap, but Re checks possible: FM

At this time, I am not thinking of putting any cap on FII (foreign institutional investment) inflows.

 The government ruled out curbs on foreign portfolio investment into the equity market, but said the central bank may intervene in the forex market to check rupee appreciation that was hurting exports

The current levels of capital inflows, which exceed financing requirements of the current account deficit, have put pressure on the rupee, resulting in its appreciation over the last few months.


The RBI has already expressed concerns over rising capital flows, which could further increase after further monetary tightening, which looks imperative in view of the sticky inflation.

Lets welcome November we will see a new game across countries related to forex,interest rates.inflation,unemplyement.