Rise of India’s middle class
Interesting chart posted by Zerodha founder - Nikhil Kamath.
Assuming this income pyramid shift holds true and we are to have much bigger middle and upper middle class over the next decade, which industry you think will prosper the most ?
Liquidity movement decides the Asset Allocation
This chart depicts relationship between Money i.e. liquidity (USD) and 'Cost of Money' i.e., interest rate (USD 10Y yield). This relationship held pretty tight and moved in tandem in 2021 & 2022. In 2023, the gap has started to emerge with cost of money shooting higher and liquidity i.e., USD running behind to catch up. The last time Treasury yields were at these levels, the US Dollar index was 5-10% higher than current levels.
What happens to risk assets if USD runs faster to catch up to new high 10 year yields? FYI - Last time this happened all assets other than USD went bleeding...
Global markets valuation basis PE and CPI parameters
9 out of 18 global equity markets trade at a PE premium relative to that historically implied by their CPI levels and be at the risk of disappointment should inflation remain stubbornly high.
P.S – Have you seen Brazil valuations?
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