Deepak Shenoy's blog

The Oddities of US Inflation

Krugman says “Disinflation Confirmed”. Because if you remove housing from US core inflation the graph still slides downwards.

Let’s see – Core inflation means inflation minus food and energy. Then you remove housing. And as part of inflation calculations you do “hedonic adjustments” – that you can get a BETTER product for the same price – like a TV at $330 has more features than last year, so you reduce the price of the TV in your inflation index price set to say $195. Then they do “substitution” – meaning if the price of beef goes up then people will buy something cheaper, say chicken, so you put the cheapest of the lot in the index. And “reweighing” meaning people use less of what’s expensive, so reduce it’s weight.

Rupee Dollar Exchange Rate Woes

A reader mails in: While reading thru the financial page of a newspaper I read this - "The rupee surged to a six-month high against the dollar on Thursday & closed at 44.20, up from a low of 52.06, 18 months back. With the dollar likely to fall furthur against the rupee, IT firms will be hit hard as their products will become costlier."

At Yahoo: Frequently Unanswered Questions

I answer Frequently Unanswered Questions in my Yahoo! column: Over the last few months I've received a number of questions over email, for which I will profusely thank you. There are a few that I'd like to respond to collectively, because I have been unable to provide individual answers. I also realized the answers are useful to a broad audience.

India Q2 GDP Growth at 8.9%

From the official report: ESTIMATES OF GDP BY ECONOMIC ACTIVITY (a) At constant (2004-05) prices 2. Quarterly GDP at factor cost at constant (2004-05) prices for Q2 of 2010-11 is estimated at Rs. 11,46,637 crore as against Rs. 10,53,057 crore in Q2 of 2009-10, showing a growth rate of 8.9 per cent over the corresponding quarter of previous year.

FIIs Starting To Exit in November 2010?

Foreign investors seem to have reduced their allocations to India in the last few days as they withdraw funds from the market. From June they’ve only been investing more into the market, and September’s seen massive inflows. The outflows are not much – just 3,500 crores this week. In November the Nifty is down about 4% (From 6000 down to 5750) and FIIs still have a net positive investment of 4,400 crores for the month. The cumulatives (to smoothen out small issues) is positive at the 120 day level, but is starting to go down at the 20 day cumulative.

The Bribery Scam: Negative for Real Estate

The CBI yesterday busted a scam where executives in banks and fin-organizations took bribes (surprise!) to give real estate developers large loans. Among the arrested were a director of Central Bank, and senior executives of LIC Housing Finance, Punjab National Bank, Bank of India and an intermediary called Money Matters Financial Services (MMFS).

Syndicate content