The manufacturing sector growth has undergone a roller-coaster ride for a decade now, globally. The huge developing economies around the world progressed, taking the place of first-tier global suppliers. This helped in contributing towards several developments such as subsistence agriculture, increase in per capital income and standard of living within the nation. In the meanwhile, advanced economies suffered the brunt of severe recession which in turn curtailed demand, thereby decline in employment rate. Advanced economies are then compelled to counter such downfall by paying due attention to innovation and competitiveness, research and development, exports and productivity growth in the manufacturing sector.
The dynamics of manufacturing sector is ever changing, embracing equal degrees of opportunities and challenges within its fold. To be more precise, manufacturing sector growth demands a brand new perspective,
* The manufacturing sector has become largely dependent on a number of service-oriented industries.
* Its primary focus is on innovation, productivity and trade as opposed to growth and employment in the past few decades.
* It has diversified into four distinct industry sectors like metals, automobiles, capital goods and consumer durables.
* The increase in demand among developing nations coupled with technological innovations aims to promote new opportunities in the sector.
* On the downside, volatile economic conditions across the globe has led to high levels of uncertainty in the sector.
It is evident that both, business leaders and policy makers alike are in critical need of reliable data at regular intervals to better understand and react to the positive or negative shift in the manufacturing environment.
Zyfin Research, a market research and analytics firm has come up with its proprietary index, the monthly manufacturing growth indicator. It estimates the index of industrial production about two to five months in advance. Further, the index reported 0.5% for April 2014 as compared to -1.9% in March 2014 (year-on-year), predicting a positive growth in manufacturing sector. This helps economists, industry planners and market analysts to arrive at strategic plans and reforms for improving the sector.
Key insights on manufacturing sector growth from Department of Industrial Policy and Promotion:
* India’s GDP recorded 4.9 per cent in FY 2013-2014, marginally above 4.5 per cent in FY 2012-2013. The manufacturing output showed a decline by 0.2 per cent in FY 2013-2014 as against 1.1 per cent growth in the previous year.
* On a comparative analysis, GDP growth of different sectors reveal that manufacturing sector is at its lowest ebb.
* In the Indian context, robust manufacturing sector generating higher employment rate would help the country’s economy achieve an annual growth of 10 per cent.
* The manufacturing drive of the country should be initiated through innovation led economy. Innovation at the research and development stage would greatly increase manufacturing sector growth.
* The privately-owned manufacturing sector requires better creativity and competitiveness to achieve global market leadership.
* 75 per cent of the index of industrial production (IIP) is constituted by the manufacturing sector.
* Mega industrial zones are proposed to be set up across different parts of the country in order to boost manufacturing sector growth.
* The National Manufacturing Policy has devised plans to increase the contribution of the manufacturing sector to national GDP by 25 to 26 per cent in the next decade. Challenges: Infrastructure bottlenecks, deceleration in capital investment and weak domestic demand owing to higher interest rates are the major setbacks that amounts to poor manufacturing sector growth.
Solution: A number of government policy reforms announced in the interim budget session on February 17, 2014 includes slashing back excise duty, speeding up stalled projects and relaxing several other legislative pressures on the sector.
– A slow but steady revival in the global economy, followed by gradual rise in supply-demand chain in developing countries.
– Reducing inflation rate, strengthening value of rupee with gaining momentum of consumer confidence level post-elections in India.
ZyFin provides consumer sentiment indices, macro economic indicators, economic forecasts & macro analytics to connect the real economy to markets.
They came, they saw, they tanked the markets… Wednesday was supposed to be a good day for bulls. High hopes were placed on the Federal Reserve, and the likelihood they would “do something” to keep the economy and asset prices propped up. They did do something. But Operation Twist turned out to be Operation Bust. Hopes were dashed on realizing that a $ 400 billion shuffle, from short-term Treasuries to long, was all the markets would get. Small beer, that. The idea — pushing down long-term interest rates to help the U.S. economy — never made much sense. Long rates were already at rock-bottom lows, a reflection of the fear that things will stay sluggish for years. So how would it help to push low rates down even further? The economy needs jobs, not juice. We have a red tape problem, not a liquidity problem. And yet, as Charlie Munger has quipped: “To the man with a hammer, everything looks like a nail.” All the Federal Reserve can do is run the printing press and tweak interest rate levels. So Fed officials try to convince themselves such will help. But it wasn’t just the Federal Reserve that sent markets into a tailspin this week. Data came in ugly from other corners of the world too. China’s manufacturing sector contracted, for the third month in a row. Eurozone manufacturing contracted for the first time since 2009. Financial stocks were bloodied. And Mohamed El-Erian, the CEO of bond giant PIMCO, warned of crisis in the European banking system. There are signs of “an institutional run on French banks,” El-Erian noted in the Financial Times. He fears that, if the run intensifies, Europe could be “thrown into a full-blown banking crisis that aggravates the sovereign debt trap, renders certain another economic recession and significantly worsens the outlook for the global economy.” Amid equity bellwethers, one name to watch is FedEx (FDX:NYSE), the second-largest package delivery company on the planet. Thanks to the scope and scale of its operations, FedEx is a window into global economic activity. When FDX is strong, customers are shipping and receiving all sorts of packages, indicating a healthy business climate. When FDX weakens, however, it can be a negative “tell” with potential downturn in the cards.
As the chart above shows, FDX is now flashing a major warning sign. The company reported higher quarterly profits this week, but cut back on its full-year outlook. The stock dropped 10% on the news. If you’re loving this article, sign up for Taipan Daily to receive all of Justice Litle’s investment commentary. Yet another fallen giant is Morgan Stanley (MS:NYSE), trading near its old financial crisis lows. It’s hard to pin down the European bank exposure at Morgan; investors are selling now and asking questions later. The beat goes on… Bank of America (BAC:NYSE) plumbs fresh lows as I write. Goldman Sachs (GS:NYSE) is back below $ 100 per share, for the first time since March 2009. The whole financial sector is in flames. A new round of bank downgrades from Moody’s came at an exquisitely awful time. Even commodities are taking it on the chin this week. That’s at least partially due to “portfolio contagion,” where losses in one area of the portfolio lead to
Just about the only upside winners this week have been volatility, Treasuries and the U.S. dollar. The USD has broken out on large volume, in corresponding mirror image to breakdowns in the euro, British pound, Australian dollar and so on. (Macro Trader continues to be short the euro and short China.) It’s further notable that the dollar surged in the aftermath of a Federal Reserve announcement. For quite some time, Chairman Ben Bernanke has been cast as a destroyer of the dollar. The Fed’s words and actions are known for hammering the USD down, not pushing it up. If that equation has flipped around, however, it could indicate a sea change in market psychology. If the powers that be are seen as “out of bullets” — stimulus measures played out, from the U.S. to Europe to China — deflationary slowdown fears could squeeze the markets in an even tighter vise grip.
: Justice Litle is the Editorial Director of Taipan Publishing Group, Editor of Justice Litle’s Macro Trader and Managing Editor of the free financial market news e-letter Taipan Daily. Justice began his career by pursuing a Ph.D. in literature and philosophy at Oxford University in England, and continued his education at Pulacki University in Olomouc, Czech Republic, and Macquarie University in Sydney, Australia.
THE PENNY seems to be slowly dropping. Investors have taken fright at how they have driven up the value of the tech sector. A range of big name tech firms have suffered sharp falls in share prices. Twitter is down over 40 per cent over the last three months. Facebook has fallen by 11 per cent over the same period.
But before we start congratulating ourselves that the follies of the last tech bubble are being avoided, a cold look at the facts is needed. Despite the recent correction, many tech companies remain remarkably over-valued by any rational analysis. More importantly, given the size of the sector and the money involved, this unsustainable boom now poses a much bigger risk to the health of the global economy than a decade ago.
It is hard, of course, to draw comparisons over valuations. As one commentator put it, tech – and particularly internet – stocks are not judged by the “financial laws of gravity that determine the value of fuddy-duddy corporations like General Electric”. They are, John Cassidy wrote in his New Yorker blog, viewed as “invaluable options on the limitless future of online commerce which, one day soon, will pay off in limitless profits.”
Only this suspension of economic reality can explain how Twitter, which had then yet to make a profit, was valued at $ 31bn (£18.3bn) when floated in November. Or why Facebook paid $ 19bn for WhatsApp, a messaging service which is still searching for a way to extract revenue from its subscribers.
And the boom is not limited to the US. In London, the sale of shares in takeaway food website Just Eat last month gave the business a value of £1.5bn. That is a staggering 100 times earnings before interest, taxes, depreciation and amortisation (EBITDA).
Tech companies, of course, argue that such old-fashioned metrics simply don’t apply to their businesses. But even when using measures which take into account expected growth, such as price to sales, valuations are extraordinarily high. The last tech bubble, for example, saw many tech stocks bid up over ten times sales before the inevitable crash came. The ratio is now often 20 times, or even 33 times in Twitter’s case at its initial public offering.
We saw what happened in the early 2000s when the music stopped. Pets.com, which raised $ 82m when floated in 2000, went bust nine months later. eToys, whose shares floated at $ 20 in 1999 and then almost quadrupled in price, filed for bankruptcy in 2001. Investors lost huge sums of money. Startups went out of business in their droves, and $ 1 trillion was wiped off the sector in a day. Those who argue that history need not repeat itself point to the fact that e-commerce is no longer a new development but an established fact of life. Technology continues to transform every aspect of our world, with no prospect of the revolution slowing.
Investors, too, claim they are more professional and experienced. The companies involved are also global in their consumer base and outlook rather than restricted largely to the US. They are apparently more sophisticated and mature. Unlike in the late nineties, when many of the tech firms coming to market were barely months old, Twitter was set up in 2007, Just Eat in 2001.
The same wishful thinking has, however, been used to justify every feeding frenzy since tulip mania in seventeenth century Holland. There is nothing contradictory in believing that technology will continue to change the world, yet also doubting that those companies – and investors – now at the forefront of the revolution will reap the financial benefits. Many of the darlings of the first technology boom are now history.
What’s more worrying is the impact that another crash could have on the global economy. It won’t just be investors in tech stocks and internet entrepreneurs who will lose out.
Over the last decade, the scale of the money invested in the technology sector and the number of countries at risk has grown enormously. Google, for example, is now valued at about $ 350bn, higher than Malaysia’s GDP. Facebook’s market cap is equivalent to the size of Vietnam’s economy.
Another collapse in the value of the tech sector will hurt established successful businesses like them, as well as those based more on a wing and a prayer. It will send shock waves across the global economy, damaging confidence and reversing recovery.
What will be the trigger? It is the intervention of central banks that has helped stoke up the tech boom as investors hunt for better returns. As central banks begin to unwind monetary stimulus, the risk is that the present retreat from the sector will become a stampede. It poses plenty of dangers for all of us.
Guy Hands is chairman of Terra Firma Capital Partners.
Guy is Terra Firma’s Chairman and Founder. He is the Chief Investment Officer and sits on the boards of the General Partners and heads Terra Firma’s Management Committee. If you like this article and want to read more on this topic, please visit us here on our web site Terra Firma and find out more.
Today, companies are truly moving forward or crumbling, there is no in between. I hate cliches but this is reality. By now, unless you’ve been living in a cave you’re highly familiar with the successes, failures and genius of global securities guru Warren Buffet and monopoly mastermind Bill Gates. They’ve changed the face of business and all who come to the scene now seem to be some morphed hybrid of the two as neo-consultants and corporate strategists draw their inspiration from all or a portion of ideologies and processes originated from these two men.
They’ve introduced a side to acquisitions, mergers, globalization and monopolizing markets that university business professors and modern day corporate leaders were blind to but now a sub industry has been introduced based on the theories and concepts of these entrepreneurs. As a freelanced writer and ghost writer for blogs, journals, newspapers and other medias I spend my life researching the ‘next great thing’ and in this case of spend years researching the next international economic trend setter, rule breaker and the one individual that will do the impossible, merge economics with politics in a socially positive and economically responsible approach.
We all know that money is the driving force behind politics but no one has been able to blatantly stand in front of a room of American and European economists and trend setters and actually prove the ability to formulate real, publicity friendly strategies for actual domestic and global alliances between major economic powerhouses and international political figureheads, lobbyists and special interest groups. But last week my search ended when I was having drinks and a small out of the way hotel in the Washington DC suburbs of Alexandria, VA.
Let me walk you through my experience. I was meeting a lobbyist for Israeli affairs to get some insider information and quotes for an article I’m writing on the Palestinian/Israel conflict and my source agreed to meet me for a few minutes before another meeting he seemed to be pretty excited about. We sat down and the first thing that took me back was this gentleman, an extremely renown strategist for all things ‘lobby’ as he’s called on specifically when governments or other lobbyists are in crisis management mode. As we were sitting down he said, ‘Here you sit there and I’ll sit here, I don’t want to be late for this meeting as it will dictate my firms survival in the near future’ as he said this he seemed nervous. We sat down at two armchairs in the lobby so that we could talk and view the guests for this insider’s meeting as they came in.
As it got closer to 9pm (the time the meeting was to start) I witnessed some of the most influential senators, congressmen, ex-presidents and prime ministers and other major lobby group senior partners, not to mention CEO’s and CFO’s that I’ve only seen on TV and read about in Fortune and other business journals that have turned down my work in the past (I’m not bitter…ok maybe I am). At this point I knew something was up so I asked my source if I could join him and I’d do the note taking so all he had to do was sit and listen as none of his staff was with him to take up this task, he agreed.
As the meeting was ready to start I found myself in a room with 50 of the most prestigious names in politics and some of the most pedigreed men in business (strangely there wasn’t a single female in the room which I didn’t realize until I looked over my attendance notes before writing this freelance entry). The room was nothing but an ocean of whispers and head nod greetings and I truly felt as though I had stumbled upon some Bilderberg sub-group or Illuminati think tank meeting. Above the whispers I kept hearing one word ‘Machiavelli’ but there was no tongue and cheap grin after the name, these men were using this name with curiosity and absolute awe.
The meeting was called to order just like a traditional board meeting and the ‘speaker’ was introduced, James Scott from Princeton Corporate Solutions. I heard of the company but never the name of the individual. As he was introduced everyone sat up straight then leaned in to hear what this guy had to say with the focus you would if you believed you had the winning lottery ticket at the number announcement.
James came from the back of the room to the front. He stood there in front of a room of political and corporate masters and I could see the reality and truth in everything that I’ve ever heard about an invisible puppet master behind every face of a political, Fortune 100 CEO/Board and special interest group. As I’m looking at him I’m looking at the men in the room and feel myself getting whiplash as I’m trying to put the pieces together. Turns out James Scott has been the strategies consultant to some of the biggest moves in recent global economic and socio-political history. He’s assisted these men with getting elected to their positions via multiple indirect ‘cat’s paw’ consultants and this was actually the first time many of these gentlemen have actually met him though he’s created and perpetuated their careers.
As he spoke you could hear a pin drop in the room. This 30-something strategist could pierce the Berlin wall with the focus in his eyes. His voice spoke with the authority of a demigod with a hundred lifetimes of strategies experience with zero indicators of second guessing or insecurity in his voice. His posture was Napoleonic and each time he would mention one of the attendees by name they would crumble and blush like the child of a father praising them for a job well done.
As I began to recuperate from this mind warp I felt a nudge from the lobbyist I was accompanying and he motioned a pen to pad gesture which indicated that I was to get down to taking notes. The meeting came down to introducing economic and influential political contacts to one another as both sides were delegated a particular task. This was the first time that I’ve ever witnessed someone of influence offering a strategically entwined relationship between business and the legislators who directly influence the outcome of business decisions and vice verse in a way that wasn’t damaging, lopsided or with a critical ulterior motive that would injure one side while serving the other.
Here is what I took away from the meeting in short, as I’m trying to condense a 5 hour meeting into a few paragraphs, basically impossible but let me try though the attempt to assimilate this information in a way that is conducive to getting my point across which may be fatal from the onset but I’ll give it a shot.
The approach by James Scott was entirely Machiavellian in nature with the realities that in order to serve the greater good, some contributors fall to the wayside while others are part of the future picture and overall stratagem. Some of the people in the room were tacticians while others were affiliated because they were strategists. The difference between the two in this case were the tacticians were those in the scholastic/analytical field of a lifetime of memorization of previous policy contributors while the strategists were the facilitators of those formulaic tactics by adapting policy and scholastics to the real world environment and current events.
Corporations create the jobs that fuel the local economies which collectively can turn around a domestic economy. Politicians are assisted by lobby organizations and special interest groups in gaining a platform which brings with it the followers that will vote to keep them in office to perform the tasks that will assist in the greater good and put into action the ideas and concepts of the lobbyists as the lobbyists are the ultimate voice of the people. This circle of influence is what fuels economic prosperity and lack of communication between these groups can deteriorate an economy (basically what we are seeing now). The path has been deviated one too many times and the convergence of policy makers and facilitators has been derailed and we find ourselves in international chaos at every front.
This meeting cracked through, captured and set a road map for economic recovery by taking into consideration all the elements and parties as pertaining to this recuperation equation. The incestuous necessity of voter spearheads, legislatures and corporations is a mandatory prerequisite to a growing and stable socio-economic formula that will rebound and flourish. I must admit, the above is a pathetic Cliff Notes version of the meeting and it would take multiple encyclopedia size entries to even attempt, though most likely fatal, to give the reader a modest breakdown of the influential decisions that were made in that room and the positive path we set for real, long-lasting recovery.
As I left the meeting there was a sense of overall ease and a refreshed outlook on the future and for the first time in a long time I actually felt good about the outlook of this country, the west and the global strategies in motion and being configured to make this world a better place for all of us and all this rooted in the strategies formulated by a guy you’ve never heard of and a company you probably couldn’t hire even if you wanted to. It’s a strange world we live in but thanks to leaders such as James Scott (I’m currently researching him and will post more entries about him and his background as new information is made public) who would rather focus on a positive influence then standing in front of cameras as self promoters we will evolve out of this diseased global situation and into one that flourishes for all of us.
Thanks for reading For Public information about James Scott and Princeton Corporate Solutions click here and some Great Information on our global economy more on the above article to come.
Those who have decided to study finance in today’s global economy may find that world finance has taken the stage as a key component and focus. While trade between different countries is not new, advances in technology have made worldwide trade much easier to accomplish. However, the structure of the global economy is an ever changing aspect of finance, making it far more challenging as a discipline to master.
There is no doubt that technology has greatly affected every aspect of business, including finance. The Internet has enabled cloud applications that have changed the face of how business is administered and managed. The financial arena is an integral part of any business. Therefore, finance courses are greatly affected by technological advancements.
Technologies including communications have also contributed to the rise of economic integration overall. The impact of technology on the business world is one of the reasons that comprehensive finance study disciplines are routinely adjusted in order to stay relevant.
One of the aspects that dictates the trajectory of finance study is what opportunities become available. This is largely influenced by where the economy stands. The global effects of opportunity also determine how those who study finance may choose their business degree pursuit. Based upon a downturn, financial curricula may include a variety of strategies that address how to weather economic storms.
Companies may also be limited to certain funding sources and types of investors. This could then become a fundamental aspect of how new finance courses are designed. However, as world economies change, these types of limitations on financial resources may decrease.
Global economy developers generally have access to a variety of investment funds from different countries. As such, the landscape for financial opportunity is far greater than what it would be on a localized level. For example, a Canadian company may seek investors in the U.S., Europe, Mexico or Asia. These practices were at one time rare, however, in a changing economy, they shift and adapt along with globalization.
Increased financial opportunities are not limited to the more advanced nations. In fact, the less developed regions of the world may access funding from a variety of sources, such as through charities, individual investors, philanthropy and government. Non-profit groups frequently provide venture capital funding to the poor around the world. These new sustainable businesses are made possible by globalization.
In a declined economy, the focus for finance courses shifts toward providing solutions, as many businesses make notable adjustments in their capital strategies. The move toward financing from alternate sources creates different demands to consider for anyone deciding to study finance.
This article is brought to you by Bond University, the best school to earn a Finance Masters degree in Australia.
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