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 July 08, 2016.
1. I do not believe that ‘Brexit’ will happen [Source: Financial Times]
In this brilliant piece on anti-consensus thinking, author Gideon Rachman talks about how he believes that the current 'Brexit' verdict is just one of the many times voters have voted for an 'out' through a referendum which was contrary to the popular expectations, only to see nothing much happen in the end. He believes like other nations before, Britain will enter a second referendum as and when EU decides to concede to its wishes and offer new concessions - most importantly on an immigration brake on free movement of people if it has surged beyond a certain level.
2. Body language predicts dodgy hedge funds [Source: Financial Times]
According to this piece, hedge fund investors can learn a lot of from scrutinizing investment managers’ facial expressions and emotional state when deciding where to put their money in order to avoid potential blow-ups or regulatory issues. According to a new research cited by the article “insincere smiles and fleeting sneers can serve as important warning signals, while a firm jaw or furrowed brow can indicate determination”. Interestingly, large hedge fund companies, including Citadel and SAC Capital, already enlist specialists to teach interrogation tactics to staff and enable them to detect when a company’s management is lying. The hedge fund industry has also increasingly made use of experts from athletics, the security industry and the military to teach fund managers how to gain an edge in behavioral analysis, both in terms of understanding their own performance and that of investee companies.
3. Advertising: Google and Facebook build a duopoly [Source: Financial Times]
An excellent piece that describes how advertising agencies are slowly waking up to a future that has been upended and reshaped by two technology companies - Facebook and Google. According to this article, the combined share of these two companies was 75 per cent of all new online ad spending in 2015. While Facebook offers value through its rich ‘identity’ data of its users, i.e. interests, locations etc., Google offers data on ‘intent’ captured from google searches.
4. The demise of the artisanal lawyer [Source: LiveMint]
The article highlights the effect of ongoing technological disruption on legal systems around the world. While lawyers are close to the bottom on the list of jobs most likely to be replaced by robots — with just a 3.5% chance of being displaced (referring to an University of Oxford study on the subject) there is a 94% chance that paralegals and legal assistants will be replaced by computers. According to the author, if that comes to pass, it will shake the very foundation of the business of law.
5. An Englishman ponders the end of an era that began with Thatcher [Source: Bloomberg]
John Micklethwait - the editor in chief of Bloomberg - in this piece recollects the transformation seen by Britain under former Prime Minister Margaret Thatcher and how the “Brexit’ verdict can reverse the journey for the nation. He fears that Britain’s reputation as a tolerant, stable haven will keep getting shredded day by day as this saga keeps dragging on and it is not inconceivable the financial capital of Europe would move to Germany.
6. Saving crony capitalists from Raghuram Rajan [Source: thewire.in]
This article dives into the possible reason behind Rajan's recent announcement to move back to academics post the end of his term in September. According to the author, Rajan’s battle against the business powerhouses – launched so as to resurrect the Indian banking system, did not go down well with these businesses and with the government. He says that even PM Modi who himself tries to project himself as a crusader against crony capitalism, limited his actions due to entrenched interests. Driven by discomfort and insecurity from Rajan’s actions, the government found it suitable to let him leave rather than risk a clash with big businesses.
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