At Ambit we spend a lot of time reading articles that are not directly relevant to Indian stocks. However, since the Indian economy is now umbilically linked to its global counterparts, the articles that we come across have relevance for Indian stocks and the Indian economy. In that context, this report contains the ten most interesting pieces that we read this week.
Here are the ten most interesting pieces that we read this week, ended October 28, 2016.
1) What it means now to be a man [Source: Financial Times] Across the world, crimes are committed, wars are started and economies are disastrously distorted by men because of their outdated version of masculinity. However, this toxic masculinity “is mainly a set of habits, traditions and beliefs”. It is not a natural phenomenon but rather just a set of bad habits that we’ve learned over the last million years or so. This point of view is in direct conflict with the theory of “biological determinism” which characterizes women as “empathisers” and men as “systemisers”. Women had evolved to read the emotions in their children’s faces, while men had evolved to focus on spear trajectories, building materials and the martial arts. Recent research however says that gender neutrality gradually gave way to increased segregation between 1905 and the 1960s and a lot has to do with the way children are taught - by their parents, their peers and the media.
2) Investors are ill-equipped for our unfathomable future [Source: Financial Times] Axel Weber, former head of the Bundesbank, now Chairman of UBS provides a useful framework to understand current market events, such as wild swings in sterling. The first point he mentions is a cheerful one: the banking system today is much stronger than a decade ago as a result of post-crisis reforms. Big caveats like the European banks notwithstanding, the western banks now have far more spare liquidity and capital. Secondly, while the banking system looks healthier, markets do not. To be more specific, many “markets” are not true, free markets because of heavy government intervention. The third point then says that these distorted markets are increasingly hostage to unfathomable political risk. Earlier, political risk was only something that emerging market investors worried about. Now even the developed markets are susceptible to such risks. The real danger in finance is not a bank blowout but rather the threat that investors and investment groups will be wiped out by wild price swings from an unexpected political shock which could be a central bank policy swing, trade bans, election results or Brexit.
3) Can an edible spoon save the world? [Source: WSJ] An inspiring piece that discusses how Narayana Peesapaty, a scientific consultant and researcher, is set out to reduce the amount of waste created by usage of plastic utensils. His invention, the edible spoon, made out of Sorghum had received orders for 7.5 million spoons till mid-April. Peesapaty has a higher aim as well. Given that traditional Indian crops, rice and wheat, are water guzzlers, which are literally sucking the country dry, he wants to shift Indian consumer to Sorghum which is much less thirsty. He is also exploring business ideas that could help eliminate another ecological scourge - the straw from the wheat and rice harvest, contributing to the asthma-inducing haze that enshrouds New Delhi and other cities. According to him, that straw can likely be pulped and made into sanitary napkins and diapers. Peesapaty also hopes to extract the water-resistant compounds that coat the stems and press-mold them into biodegradable (but inedible) cups and plates. In tech-crazy India, Peesapaty wants to prove that code jockeys aren’t the only successful entrepreneurs.
4) Turning off the lights is no fix for overworked Japan [Source: Financial Times] In Japan, concerns over employee health have been renewed by a long-overdue government white paper on the problem of overwork, and a series of raids on the offices of Dentsu, the country’s largest advertising agency. Behind the Dentsu raids is the death, last December, of Matsuri Takahashi, a 24-year-old graduate recruit who took her own life after toiling for less than a year at Dentsu and logging, towards the end, more than 105 hours of overtime a month. The article argues that the lights-off trick that is currently employed has been tried in other Japanese companies and government ministries — and, unless there are penalties for those who remain in the office (as some try with desk lamps), the ploy does not work. While a lot of companies will no doubt introduce lights-off policies, many employees may counter them through the mass purchase of desk lamps. The inescapable reality is that Japanese companies are placing demands for crazy hours on a workforce that, if not exactly willing, shows very little appetite to fight for an alternative.
5) The return of dollar shortages [Source: Project Syndicate] The “dollar shortage” which was first seen after the Second World War when European economies coping with extensive war-related damage had only the US as a provider of capital to rebuild their industrial base is evidently showing its presence again. The sources this time are countries in Africa, the Middle East, Central Asia, and Latin America that have been hit very hard by plunging oil and commodity prices since 2012. While countries like Russia, Brazil, and Colombia have seen a wave of currency crashes those that maintained more rigid exchange-rate arrangements experienced rapid reserve losses. The dollar shortage has become acute in countries like Egypt, Nigeria, Iran, Angola, Uzbekistan, and South Sudan, among many others. The black market premium over official exchange rates has shot up leading to a serious scenario in countries like Egypt and Venezuela, as well as much of Sub-Saharan Africa, which rely heavily on food imports. Given import compression, the resulting scarcities, and skyrocketing black-market prices have left the most vulnerable segments of the population at real risk.
6) How Autism shaped the modern conversation [Source: nautil.us] As per this piece, the trend of emoticons on Facebook, what’s app etc began as a result of autism—or, at least, with autistic-like personalities. According to Steve Silberman, author of the 2015 book “Neurotribes: The Legacy of Autism and How to Think Smarter About People Who Think Differently”, emoticons are “social captioning for people who have trouble parsing sarcasm and innuendo,” he writes.” The invention of first emoticon lends itself to this argument. The smiley was invented in Carnegie Mellon when a sarcastic comment was misinterpreted, thus presenting the need for clear demarcation of serious comments and jokes. According to Silberman, emoticons make the subtleties of emotion explicit to “people who struggle to process subtle social signals in face-to-face situations.” Emoticons, he adds, “are not a universal language among autistics, because all autistic people are different, but icons work well with the ways some autistic people’s brain’s work.”
7) India is celebrating everything and doing it differently [Source: Livemint] The way urban India is celebrating traditionally private festivals like Teej and Karva Chauth and regional festivals like Ganpati and Durga Puja has changed. Not only are the celebrations now conducted on a larger scale, the festival spending is also no longer just about traditions and home-cooked sweets. Festival spending is now also an occasion to show off and socialize. People splurge on buying new clothes or consumer durables on more than one occasions during the year (traditionally limited to birthdays or Diwali). Restaurants offer authentic regional food like Onam sadhya; packaged foods and drinks companies adapt to celebrations and beauty salons are a part of the new ritual. For some though, it is about getting away from the community madness and holidaying out of town with family. As a result, besides the traditional consumer durables and apparel, many more segments are now seeing a surge in sales during the festive season and these include packaged food and beverages, grooming and travel.
8) When her best friend died, she rebuilt him using artificial intelligence [Source: theverge.com] This emotional essay which has gone viral globally describes how Eugenia Kuyda rebuilt the persona of her closest friend, Roman Mazurenko, using artificial intelligence after the latter’s untimely death. The technology underlying Kuyda’s bot project dates back to 1966 when Joseph Weizenbaum unveiled ELIZA: a program that reacted to users’ responses to its scripts using simple keyword matching. While today’s bots remain imperfect mimics of human interactions, recent advances in artificial intelligence have made the illusion much more powerful. Artificial neural networks, which imitate the ability of the human brain to learn, have greatly improved the way software recognizes patterns in images, audio, and text, among other forms of data. While we’re still a while away from perfecting the technology, it provides a glimpse of how someday we might be able to truly keep our close ones alive long after they’re gone. A side effect of digital age will be that when we die we’ll leave behind a lifetime of text messages, posts, and other digital ephemera. For a while, our friends and family may put these digital traces out of their minds. But new services will arrive, offering to transform them — possibly into something resembling Roman Mazurenko’s bot.
9) How India’s indigenous sport – kabaddi became a prime time sensation! [Source: LiveMint] The 2016 Kabaddi World Cup, which took place in Ahmedabad from 7 to 22 October, not only saw India winning the world title for the third time in a row, but also brought together nations far and near, in different stages of their kabaddi growth. What’s interesting is how kabaddi managed to grab attention over other sports like badminton and wrestling. Deoraj Chaturvedi, the CEO of the International Kabaddi Federation, describes that kabbadi had a ‘rural’ tag attached to it. As a result there wasn’t enough pride in playing kabaddi. It used to be a popular game but then there was no money in it which meant that not many people took to it. The launch of Pro Kabaddi league by Charu Sharma, a TV sports commentator and the managing director of Mashal Sports in collaboration with Star Sports in 2014 changed that. Central to the league’s success was the change in image - they dragged the game from dusty ad-hoc playing fields to blindingly neon-lit stadiums with thumping music, building the atmosphere further with aggressive media and marketing. It leveraged the brutal contact aspect of it, something that audiences can’t get enough of.
10) Feedback on your dinner party chat will do you good [Source: Financial Times] Robert Hiscox, the founder of the London listed insurance company Hiscox Ltd, believes in offering post-dinner feedback to people on how he had found their conversation at dinner parties. He believes that conversing at formal dinners is a skill. Since it is hard to get better at anything if no one tells you where you are going wrong, Mr Hiscox believes that giving feedback after dinner is the way to go. Through her own experiences, Lucy Kellaway the author of this piece highlights how she was at first resistant to this idea but gradually understood this. She does highlight that the test of unsolicited feedback is not whether it is rude or unwelcome, but whether it serves the greater good.
- Saurabh Mukherjea is CEO (Institutional Equities) and Prashant Mittal is Analyst (Strategy and Derivatives) at Ambit Capital Pvt Ltd. Views expressed are personal.