Discover more from The Signal
Record car sales are a mirage
Also in today’s edition: Deepfakes invade Bollywood; Hobson’s choice for VCs; US, China have a date; Chinese games level up
Good morning! No festival season in India is complete without heartwarming stories of employer generosity. For long, Surat’s diamond makers took the spotlight, but this year we have a new winner! Meet P Sivakumar, a tea estate owner from Tamil Nadu, who gifted each of his employees a Royal Enfield bike. Per BusinessToday, Sivakumar has a history of generosity but this year he went the extra mile. He not only gave the bikes but also rode with his employees for a cool insta video, winning hearts all over the internet. 🤌
Roshni Nair and Adarsh Singh also contributed to today’s edition.
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The Market Signal
Stocks & Economy: US bond yields gradually coming down after the Fed indicated it may be done with rate hikes has given strength to a stocks rally that has now lasted eight days. Corporate performance in the September quarter—four out of five companies beat street expectations—also buoyed US shares. Brent crude fell below $80 per barrel.
Fed chair Jerome Powell is expected to speak on Thursday in a panel discussion on monetary policy challenges. ECB chief Christine Lagarde is scheduled to speak on Friday at a fireside chat with Martin Wolf of the Financial Times.
Positive sentiment was washing over Asia too, with stocks across the region trading in the green zone. Indian equities will also likely open strongly as indicated by morning action in the GIFT Nifty. Technical analysts sense indecisiveness among investors even though the overall sentiment is positive.
Not A Sparkle In The Season
Cars that left factory gates in the past few months have nowhere to go beyond dealers’ yards.
Auto dealers are urging carmakers to slow down despatches as inventory levels have hit a record 63-65 days. Automakers had reported all-time high sales in the July-September quarter. Dealers are seeking discounts and inducements for buyers, without which they expect the festival season to be a damp squib.
Toyota was the only exception. The company cannot make cars fast enough.
Pollution chokes trade: Worsening air quality has reduced footfalls in Delhi’s markets, traders complain. They say that the wedding season is typically when shoppers from nearby states too troop to Delhi. But they are staying away.
Delhi has ordered schools to advance the winter holidays to November 9-18. It will mess with the tourist season if that means schools will stay open at the end of the year.
Hypocrites Hall Of Fame
India’s Ministry of Electronics and Information Technology has issued an advisory to social media companies to remove deepfakes and misinformation within 36 hours of such content being reported. This comes in the wake of deepfake content of actresses Rashmika Mandanna and Katrina Kaif circulating on platforms.
In the past, the Centre cited AI-generated misinformation to justify the (possible) invocation of a controversial section of the IT Rules to push WhatsApp into breaking encryption protections. Never mind this and other recommendations to rein in AI; the ruling party itself has used deepfakes in previous elections.
Looking at you, tech bros: Deepfakes have violated women’s agency for years. Despite that, VC money continues to flow into synthetic media startups. The very social media majors tasked with identifying misinformation also have skin in the AI game, and no country barring China has done anything substantial to ban deepfakes or limit their proliferation.
Living Off Table Scraps
It’s hard to believe the fat incomes of so many glitzy venture capitalists are built on the largesse of a staid government body. That’s reality for you.
MSME financier SIDBI wants to cut the base fee it pays fund managers, 40% of whom are first-timers, to 1.5% from the standard 2%, The Ken reports. SIDBI has a milestone-based graded fee structure and VCs also get a windfall cut from exits.
Why?: SIDBI prioritises investing in high-impact, high-risk sectors over high returns. It has so far backed 900 startups through 130 VCs. Lower fees mean more money for startups.
VCs are worried other limited partners (LPs) will follow SIDBI’s cue.
With interest rates and uncertainty high, sources of easy capital have all but dried up. Global firms such as Tiger Global and SoftBank, which were minting Indian unicorns a couple of years ago, are nursing massive value erosion and loss of credibility. Some are struggling with succession issues. Scarred LPs are hesitant to invest and VCs in the US are now chasing ‘mini millionaires’. Investments in the first half of 2023 declined 48% in value.
That’s why SIDBI calls the shots. It is the biggest LP in the Indian VC ecosystem. Some VCs are turning away from SIDBI but its ₹10,000 crore ($1.2 billion) fund of funds is not easy to ignore. With several startups going belly up and once highly valued firms under a cloud, the spotlight is on VCs which pumped them up.
Eagle And Dragon Sit Down To Talk
The relationship between Washington and Beijing is poised for a delicate turnaround.
Sustained diplomacy over the past few months has rebuilt ties, which began deteriorating when former President Donald Trump triggered a trade war and reached their nadir last year when the US accused China of floating spy balloons over its territory. They have even discussed nuclear weapons and proliferation. The efforts will culminate in a meeting of Presidents Joe Biden and Xi Jinping on the sidelines of an economic conference in San Francisco.
Xi is also slated to meet US business leaders.
The detente does not mean everything is hunky dory. Both will continue to move pieces across the global chessboard. The US is investing $553 million in the Adani Group’s port project in Sri Lanka to check Chinese inroads there. And Beijing is said to be building a military base in Oman.
After social media and e-commerce, gaming is the latest frontier to showcase Chinese prowess in computing. Immersive storytelling and beautiful art are turning games such as Genshin Impact and Age Of Origins into global bestsellers. Even in mobile gaming, the country is producing a third of the highest-grossing games outside China.
A paradox: The Communist Party has a love-hate relationship with the gaming industry. We discussed this at length in our podcast. Because of this, many game developers are now pivoting to prestige gaming and foreign markets such as the US and Japan for revenue.
Finally: After much trouble, Rockstar Games is all set to announce the launch of Grand Theft Auto 6.
🎧 The rise of made-in-China video games. Also in today’s edition: Neuralink scouts for volunteers for its human trials 👀. Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.
Don’t do it: Samsung and Qualcomm are among the companies that have raised concerns over India’s push to bring live TV to smartphones, reported Reuters.
Middle ground: India is considering reducing import duties on some electric vehicles from the UK that are priced above $80,000 in a bid to seal the free-trade agreement between the two countries.
And the award goes to…: The Indian Institute of Technology Bombay is the best university in India and the 40th-best in Asia, according to the latest QS World University Rankings.
Need you folks: India will fast-track visas for Chinese nationals working in manufacturing sectors eligible for the production-linked incentive (PLI) scheme.
💰💰💰: After becoming a unicorn with a $200 million fundraise in August, quick commerce startup Zepto has now raised $31 million from existing investors.
Climate crisis: 2023 is set to be the hottest year ever, with the average global temperature being 1.7C above late-1800s levels.
Strong signal: India is planning to disburse over ₹400 crore ($48 million) to 20 telecom gear manufacturers, including Nokia and Jabil, that have achieved their targets under its PLI scheme.
THE DAILY DIGIT
Or $60 million. That’s how much the Big Five consultancy firms earned in total from over 300 contracts with various Indian government ministries and departments between April 2017 and June 2022. (The Indian Express)
Blinding lights: After burning a hole in investors' pockets, the NFT craze is now burning a hole in people’s corneas. Quite literally. More than 20 people have reported burning eye pain and vision problems after attending ApeFest, a three-day event hosted by Bored Ape Yacht Club. While no exact cause has been identified yet, fluorescent paint and UV lights are the leading contenders. Direct exposure to UV lights causes photokeratitis, which causes extreme pain in the eyes… kind of similar to seeing your NFT portfolio’s valuations.
Netflix and chill…: …in Netflix’s own theatre. The streaming giant is buying up classic film exhibition centres across the US. Its latest catch? The legendary Egyptian Theatre in Hollywood, LA. Originally made to exhibit silent films, the theatre had fallen on hard times. Netflix has shelled north of $70 million on its restoration and intends to showcase film premiers in the renovated theatre. On weekends, a non-profit will curate a special programme consisting of recent and classic films. TBF, stranger things have happened.
Superbad: If your X/Twitter feed is filled with nerds and science guys, you probably remember the superconductor mania this summer. For the uninitiated, superconductors are materials that conduct electricity without resistance. But these materials require lab-controlled temperatures and pressures. A series of papers, filed in quick succession, claimed to have made them work at room temperature and pressure. One such paper was from Professor Ranga P. Dias of the University of Rochester, published in Nature. That paper has now been retracted by Dias’ co-authors, who claim he misled them using flawed research. 😢