Eye On India: This Isn't China!

MACRO: ASIA -Indian Industrial Production

Although the November numbers look bullish on the margin, we think it is a head fake…

India’s industrial production numbers came in at 2.4% for November, unexpectedly stronger, sequentially, after October’s -0.34% decline. This positive data point was not enough to stem the tide of post -Satyam selling as Sensex sold off by another -3.2% on the heels of a -1.88% decline in Friday’s session. The cumulative decline in India’s stock market has been approximately -12% in less than a week.

This production data looks positive on the margin. From an industrial manufacturing standpoint, India should have a few things going for it now… in Theory:

• Cheap Labor and good engineering schools
• Lower basic material prices globally
• Strategic geographic location
• Sharply decreased maritime shipping costs
Whereas the Services sector is being held hostage by declining demand in the US and Europe, and the problems facing the agricultural sector are too involved to touch on here, the Industrial portion of the subcontinent’s economy should be able to retain a relatively competitive stance in pursuit of what demand remains. It probably won’t.

India’s union biased employment laws and socialist governmental policies will make it difficult for producers to capitalize on the vast sea of cheap skilled and unskilled labor around them effectively. Additionally, the obese overlapping state, local and national governmental bureaucracies have made it virtually impossible to create new industrial facilities –with years’ worth of legal wrangling required to build new factories and badly needed new ports.

We have been negatively biased regarding India since I started at Research edge, which was the day we opened our door. We continue to believe that the deep structural flaws in the Indian economy outweigh the massive potential that lies there.

Andrew Barber
Director

Cartoon of the Day: Hard-Headed Bears

How's this for "hard data"? So far, 107 of 497 S&P 500 companies have reported aggregate sales and earnings growth of 4.4% and 13.2% respectively.

read more

Premium insight

McCullough [Uncensored]: When People Say ‘Everyone is Bullish, That’s Bulls@#t’

“You wonder why the performance of the hedge fund indices is so horrendous,” says Hedgeye CEO Keith McCullough, “they’re all doing the same thing, after the market moves. You shouldn’t be paid for that.”

read more

SECTOR SPOTLIGHT Replay | Healthcare Analyst Tom Tobin Today at 2:30PM ET

Tune in to this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more