INDIAN BANK NOTES
Currency, of course, is the oxygen of any financial ecosystem. And there again India’s rapid development and growth have the country gagging, especially after Prime Minister Narendra Modi took the extraordinary—and many would say extreme—step of withdrawing 500 and 1,000 rupee notes from circulation in November. Modi said his actions rendered the 23 billion notes to mere “pieces of paper” and were designed to neutralize “black money,” namely billions in illegal funds stashed overseas by Indian tax evaders. While the desire is understandable, the course of action seems to be hurting everyday, non-evading Indians the most. When you understand that the 500 and 1,000 rupee are comparable to the $50 and $100 bill in the U.S., you might get some idea of how traumatic a move like this is; but where Americans would simply reach for a debit or credit card under such circumstances, the huge majority of all Indian transactions are, as financial analyst Randy Moss once observed, “Straight cash, homey.” Modi said the bills will be replaced by higher security 500 and 2,000 rupee notes, a process that cost about $3 billion. While expressing his support for the removal of black money, India’s former finance minister P. Chidambaram questioned if the withdrawal justifies the cost, saying any “economic gains should be equal to that amount.” Everyday Indians are counting on it.
The day when India would jump China not only in population but as an industrial/manufacturing power never seemed closer to happening than in November when the proof was in the pudding—i.e., air in India’s biggest cities was as breathable as pudding. Measurements taken at the U.S. Embassy in Delhi put the city’s Air Quality Index at 999—literally off the charts, since the chart’s “hazardous” level tops out at 500. India’s next most polluted city, coal and industry-heavy Chandrapur, came in at 824. By comparison, China’s most polluted city, Baoding, was a pleasant 298. The air quality, or lack thereof— it’s like smoking two packs a day—appears to be an unholy marriage of old and new: rapid industrialization and such old practices as farmers burning fields and firecracker smoke from late October’s Diwali celebrations. That air isn’t just bad but expensive, as it is expected to cost India $80 billion—nearly 6 percent of GDP—in worker absenteeism and productivity, not to mention school closures and temporary restrictions on construction, coal-fired power plants and driving.
There was some good Indian news, one of the best bits being the announcement by Commerce and Industry Minister Nirmala Sitharaman that the country enjoyed 4.62 percent export growth in September. That growth, which amounted to about $23 billion, stemmed a two-month fall in exports. The jump was credited to engineering, gems and jewelry sectors and came on the heels of news that foreign direct investment in the country grew by 30 percent to $21.6 billion during the first half of 2016-17. Sitharaman said that to continue to boost exports her country will need to look to newer markets such as Africa and Latin America.
AMERICA’S TRADING UP
TRUMP & “CHY-NUH”
Donald Trump’s election as President of the United States in November had the effect of throwing multiple financial and business matters, especially global ones, into a state of flux. What will it mean for nervous international markets? How will it affect the American tax code? What long term effect will it have on the masonry industry? One thing that is all but assured is that the U.S. will not be entering into trade agreements the Obama White House had nurtured and pushed over the past couple of years, most notably the Trans-Pacific Partnership. In fact, Trump hates the TPP so much that scuttling it figures to be one of the first things his administration does. And that’s only the beginning. Just before his election, Trump said in a speech that “every trade deal we have is horrible and we should be ashamed of them … They’re definitive … Believe me, they will be unwound so fast.” Trump has also said that he will seek to renegotiate NAFTA and brand China as a currency manipulator, something some experts are concerned could start a trade war. Then again, Chinese President Xi Jinping called to congratulate Trump and, according to Trump’s transition team, “established a clear sense of mutual respect for one another. President-elect Trump stated that he believes the two leaders will have one of the strongest relationships for both countries moving forward.”
Remember all those stories and pictures of American oil facilities filled to the brim with black gold? Well, that amount has steadily and rather quietly been dropping this year. In fact, in late October, the U.S. exported about 5.7 million barrels of gasoline in one week, likely a record. That 811,000 barrels a day rate was nearly twice the daily reported the previous year. Where was all that oil going? Mexico and Latin America but, most often, Mexico, which has boosted its imports of U.S. refined gasoline because its refineries are generally considered less efficient than counterparts in the U.S. that are running at 50 percent capacity. Those refining problems led to a drawdown in U.S. oil supplies. Experts had expected the national supply to increase by more than 2 billion barrels; instead it dropped a healthy 553,000 barrels to 468.2 million barrels.
The presidential campaign and election had a way of sucking all the air, and attention, out of the room—just ask the NFL—so much so that a truly significant event somewhere on par with the Wright Brother’s flight at Kitty Hawk and Harold and Kumar going to White Castle was virtually overshadowed. In the early hours of a weekday morning, a big rig carrying 2,000 cases of Budweiser made a shipment in Colorado. While delicious, that may not sound like much until you know that there was no one driving the truck. Well, no human. The truck was part of the self-driving fleet from Otto, a startup bought by Uber this summer, and the delivery—which was escorted by four Colorado state trooper cars—was hailed as the first commercial service of its kind. But Anheuser-Busch’s James Sembrot, senior director of strategy, says he sees a future where “this technology becomes ubiquitous, it becomes similar to automatic transmission or cruise control.” Interestingly, the main concern about the self-driving trucks doesn’t seem to be about the technology driving the truck but shenanigans that could compromise the technology that tells the truck where to go, i.e. a Revenge of the Nerds-like frat house being visited by said self-driving trucks. Nuuuuurds!!!