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Also in today’s edition: RBI’s dance with debt; Consumers bling the house down; Singhania divorce battle heats up; China's math isn't mathing
Good morning! If you like to savour the spirits, then this one's for you. CNN reports that a bottle of Scotch whisky, Macallan 1926, sold for a record-breaking $2.7 million at Sotheby’s in London. It was one of over 40 bottles drawn after ageing in sherry casks for 60 years, making it the oldest Macallan vintage ever crafted. Augmenting its prestige is the fact that those 40 bottles were only made for Macallan’s top clients, signalling its exclusivity. Cheers to the lucky fella!
Dinesh Narayanan and Adarsh Singh also contributed to today’s edition.
The Market Signal
Stocks & Economy: Indications that the US Fed Reserve may have successfully managed to soft-land the US economy have pumped up Wall Street. The mood was lifted after buyers lapped up a $16 billion, 20-year bond sale. The Nasdaq hit a near-two-year high as tech stocks rallied.
With each passing day, chances of further rate rises are receding and hopes of rate cuts next year are rising.
Asia: After years of deflation, Japan may begin to see prices rise. Some expect inflation to touch 2% in 2024, which means the days of negative interest rates and muted consumer spending may be over. Most of Asia was following Wall Street’s cue.
China is identifying 50 property developers for financial support.
Indian equities had a weak Monday but banks, IT and midcap stocks held on to their previous gains. The trend is likely to continue on Tuesday morning as well, the GIFT Nifty hints.
RBI Breaks The Party Up…
Perhaps not a moment too soon. India’s central bank has made it harder for banks to hand personal and credit card loans out to customers. Banks and non-banking financial companies must now keep aside more money against such loans, making it costlier to lend. Brokerages predict consumer lending rates will rise, curbing loan growth.
Cash-crashed: Indian consumers have been bingeing on personal loans; Reuters reports that unsecured personal loans have grown 23% in just the last year, while credit card outstanding amounts rose 30% as of September 2023.
Banks have pushed credit so aggressively that ordinary Indians are falling into a debt trap, unable to pay their EMIs even as the economy slows down and inflation rises. Consumers say their banks pester them to convert credit card bills into EMIs or take needless (unsecured) top-ups on their (secured) auto loans. How soon before the country is gripped by a debt crisis?
…But The Party Ain’t Over Yet
Not when the wedding season just started. Jewellery and fashion retailers expect an 8-11% lift in sales this year from roughly 3.5 million weddings, despite inflation hitting consumer spending in India. Families, influenced by social media trends and shows such as Made In Heaven, are spending 10%-20% more this year on weddings.
Get it started: If you’re partying abroad (destination wedding, anyone?) Thailand is ready. The country may ditch visa requirements for more European countries after temporarily waiving them for Indians. It is also hosting a “winter festival” and allowing late-night parties, hoping to bring tourism revenue back to pre-Covid levels.
Sad vibes: Meanwhile, Americans are choosing more sober festivities as the US economy slows down. Luxury and premium brands are postponing price hikes and offering more discounts this season as consumers cut spending, grappling with higher interest rates and fewer jobs.
Sam Altman 🤝🏽 Microsoft
In the most bonkers update in the OpenAI saga yet, chief scientist and board member Ilya Sutskever—who played a critical role in the abrupt firing of former CEO Sam Altman and former president Greg Brockman—has seemingly done a U-turn. He’s one of at least 95% of employees who’ve signed an open letter threatening to quit and follow Altman to Microsoft unless a new board is appointed.
Earlier, OpenAI had defied pressure to reinstate Altman and Brockman and instead appointed Emmett Shear, co-founder of Twitch, as the new interim CEO. Then, Microsoft chief Satya Nadella dropped the mic.
Nadella has made it clear that Altman will still work with Microsoft even if he returns to OpenAI. Hmm. In effect, Microsoft’s bread is buttered on both sides.
Microsoft couldn’t divorce OpenAI despite the tumult. There’s $13 billion at stake, and it’s selling products based on OpenAI’s proprietary technologies.
But in September, The Information reported it was already working on reducing its dependence on OpenAI—to the point of developing smaller, cheaper alternatives to OpenAI products. The partnership became uneasy as both competed for enterprise clients.
With Altman, Brockman, and a contingent of OpenAI departees likely in his fold, Nadella’s diversification from OpenAI becomes easier, all while Microsoft still earns capped profits from perpetual rights to OpenAI tech.
A post-Altman OpenAI—which under his leadership was reportedly overworked and underprepared for commercialisation—may refocus on policy and research as wary backers look for returns elsewhere. That’s if it even has employees left.
🎧A post-Altman OpenAI and a post-OpenAI Altman. Also in today’s edition: the Singhania divorce battle gets ugly. Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.
The Incomplete Man
Gautam Singhania could soon be a millionaire. The textiles tycoon’s estranged wife Nawaz Modi Singhania has demanded three-fourths of his $1.4 billion net worth for herself and their daughters Niharika and Nisa.
Not until death: While the flamboyant industrialist is said to be okay with the demand, he has sought a different arrangement until his death. He wants all assets to be moved to a family trust, which he will manage as the sole trustee. That’s not acceptable to Nawaz, says The Economic Times. Singhania had revealed the decision to split on X last week.
The jewel: The Singhanias’ main source of wealth is Raymond Ltd, where promoters hold just under 50% equity. The group also counts engineering and property development in its portfolio, although they are relatively small in scale. While Gautam is Raymond chairman and managing director, Nawaz is a member of 11 boards of companies in the group.
China Trapped In Reverse Gear?
Is the seemingly unstoppable economic march of China over? Ruchir Sharma, chair of Rockefeller International, writes in the Financial Times that it’s a post-China world now, and the country’s share in global GDP will decline for the foreseeable future.
Sharma argues that a mountain of debt, a decline in working age population, and drying foreign investments will pile pressure on growth. China will have no part in the $8 trillion expected global GDP expansion in 2022 and 2023, while the US will add 45% of it.
Perhaps it’s not lost on President Xi Jinping, who just patched up with US President Joe Biden. US curbs have been hurting. Alibaba just cancelled a plan to hive off and list its cloud division. Xi, however, is unlikely to be deterred from pursuing “common prosperity” or other pet agendas. China is the strongest militarily, diplomatically, and technologically than ever before.
Rescue ops: The 41 workers trapped inside a collapsed tunnel in Uttarakhand for over a week could be there for at least four to five more days, with authorities looking for fresh options to rescue them.
More apples a day: Apple hopes to produce iPhones worth ₹1 lakh crore ($12 billion) in India in the year ending March 2024, up from ₹60,000 crore in the previous year, per The Economic Times.
Rebound: Chinese electronics giant Xiaomi posted its first sales rise since 2021—70.9 billion yuan ($9.9 billion) for the quarter ended September 2023, as against average projections of 70.5 billion yuan.
Slowdown: Citigroup has begun cutting 300 senior manager positions in a new round of restructuring ordered by CEO Jane Fraser to speed up decision making, reports Bloomberg.
Health hazard: Brick factories in Cambodia are burning garment waste from 19 international brands, including Adidas and Walmart, to save on fuel costs, leading to workers falling ill, according to a local rights group.
🤝: Colombian pop star Shakira struck a last-minute deal with Spanish prosecutors to avoid a trial over tax evasion charges.
💰💰💰: Fintech startup Kiwi has raised $13 million in a funding round led by Omidyar Network.
THE DAILY DIGIT
That’s the number of people in the world who make more than $140,000 a year—the richest 1% of humanity. And they’re responsible for more carbon emissions than the poorest 66% of humans, according to a global climate inequality report. (The Guardian)
Monkey business: As if science didn’t have enough on its plate, it’s facing a new problem. Illegally-poached monkeys from the wild are being sold as captive-bred monkeys to research laboratories across the world. The practice has been dubbed as monkey laundering. Poachers are essentially making hay of Covid-induced supply chain issues. This not only raises ethical and legal problems but also severely affects medical study results. Wild monkeys exposed to a cocktail of diseases produce different immune responses than animals that have been purpose-bred in vaccine studies. A classic case of throwing a monkey wrench.
Generation tired: Surveys in the UK are indicating a worrying trend for Gen Z in the workforce. One survey found that employees in their early 20s miss about eight work days/year—nearing the number for those in their early 50s. Mental health issues have been cited as the reason for this change. Another survey found that Gen Z workers are more likely to miss deadlines than Gen X, and that the youngest employees also waste more hours on unnecessary tasks. While the latter insight specifies that this is a natural extension of joining the workforce, the former is more worrying and requires deft handling.
Networking 101: Educators in the US are fed up with their students’ lack of interpersonal skills. It’s a problem so severe that many are now voluntarily teaching their students the art of professional chitchat. Lessons include basics like answering the dreaded question “Tell me something about yourself” to slightly more nuanced ones like writing cover letters. Teachers have pointed to several reasons behind this: smartphones, helicopter parenting, Covid, etc., but few have managed to come up with a solution for it. These lessons are a step in that direction, and they have our full backing. 🙂