India increased its per capita income/GDP by 4.5 times in the last 35 years (since 1984) In the same period, China increased its PCI/GDP by a remarkable 26 times!
The reasons are manifold and debatable and include in no particular order
- Leadership – Practical as opposed to intellectual, religious or ideological leadership
- Common language. Most Chinese speak Mandarin or a dialect close enough to that. In India, we have over 200 languages. English was the official language that helped Indians internationally but also sub-optimized the productivity of a vast percentage of the population that didn’t speak it.
- Totalitarian or single-party government versus a democracy led to the inability to create infrastructure for e.g. roads. China was able to formulate and implement a long term vision for the future – one that relied on them being the world’s manufacturing factory.
- The caste system – in essence, India willy-nilly left a vast percentage of its population out of the labour force. This is changing for the better now.
- Demographics were in China’s favour with working-age people being at a high percentage of the country’s overall population. India’s demographics between 2020 and 2027 will be superior
- Brain drain – Chinese who studied at the world’s best universities were aggressively re-hired back and offered higher salaries to come back and work in China versus what they would earn in the West. This was an example of regional governments and the State using its power for good. The Indian diaspora did not have that positive inducement in the past.
In summary, China had a vision and a steady and stable government to implement the vision.
Volatility creates opportunities for traders. If your goal is to join a hedge fund or an investment bank or just to learn some real-life lessons about trading, this interview with the Institute of Trading and Portfolio Managements Managing Partner Anton Kreil is worth a listen.
The US FED Balance sheet fell from USD 4.444 trillion in Jan 2018 to a low of 3.76 Trillion USD end august 2019. In the same period, the total assets held by major central banks (Fed, ECB, BOJ and PBOC) remained constant.
Essentially Japan stepped up keeping the total assets held by the Big 4 Central Banks nearly constant. In the same time period, the S&P500 has basically remained the same – 1% higher. The tide now appears to be turning at least in the US with the balance sheet rising since September 01 2019. Here is the historic relationship between central banks’ total balance sheet (BOE i/o ECB, rest same) and the S&P500.
This doesn’t necessarily imply causality. https://lnkd.in/gJ–Hm8
If global central banks decide to drive their balance sheets up so as to counter an impending/feared slowdown, it is hard to see the S&P500 having a massive and sustained correction, at least if you believe that the above trend is solid. Interestingly both Powell (Fed Chairman) and Lagarde(ECB, post-Draghi) made speeches in the past month indicating more accommodative policies.
Look at the USD/GDP
Observe the implied volatility skew in GBP/USD. Do you wish to learn more about Volatility surfaces and smiles? Check out this link which explains it nicely:
Or if you like more Math based explanations :), check out this link:
Certain things leaders do — exhibiting empathy and attuning to others’ moods—affect both their own brain chemistry and that of their followers. Daniel Goleman, an expert in this field at Rutgers University and Richard E. Boyatzis – Distinguished University Professor at Case Western Reserve University discusses how social intelligence skills allowing your relevant neurons to fire at crucial times can be learned. Via coaching, mentoring or consulting with someone who is strong in social intelligence, you can “learn” social intelligence and enhance these crucial organizational leadership skills.
Read the Article by Daniel Goleman and Richard E. Boyatzis