India Blogging!

Folks! I am in India right now, enjoying a nice, relaxing Saturday after a somewhat hectic week. It's nice to get away from the frigid Northeast and spend some time in Bombay (Mumbai, whatever) where the temperatures have been between 75 and 90 all week. Got another week to go here with some client visits and a client conference, and then it's home on March 4th.

Lots of travel upcoming too--ACC Tourney in Atlanta March 9-11 with Bettis, then home to Louisiana March 16-18, then to Georgia to visit TheInLaws the last weekend of March. Another week-long work trip at the beginning of April, then Scottsdale for a wedding, then L.A. for a few days to visit Ro, then Vegas for TheFace's bachelor party on April 13 and 14th. From there, fly to Newark for a night, and then to the DR from the 15-22. And then, possibly, meeting up with the family in Florida at the end of April til early May. Whew!

I'll be heading out to Powai, an area of Bombay that must be 20 kilometers away, but takes 1.5 hours to get to. Hey, India, invest in roads, dammit! I'll be meeting my 8-months pregnant cousin and her husband there. Perhaps a night viewing of Moneyball followed by some pitchers of Kingfisher and maybe some Indian-Chinese food. Can't beat that! At least I got in the workout this morning to clear the conscience. Been good on the workout front in India--got in back/biceps/shoulders/abs/1 mile run on Tuesday, chest/triceps/forearms/abs/1 mile run on Thursday, 6 mile run on Friday, and today another back/biceps/shoulders/abs/1 mile run. Weight is still hovering around the 183-185 range, but my clothes are fitting looser and I'm feeling good. Perhaps tomorrow will be a rest day, and then I'll aim to get in another strong week of workouts before heading home.

I was lucky enough to get to take a tour of the Bajaj auto factory in Chakan, just outside of Pune, a few days ago. Apparently it's Bajaj's newest, most technologically advanced plant in the country, and my god, was it a sight to behold. The factory employs 1,400 workers and churns out 4,000 motorcycles a day. That equates to roughly 1 motorcycle every 15 seconds that the plant is in operation. Seeing the process in motion was like watching something out of a Star Wars movie--you wouldn't believe how many self-guided robots are doing the work there, machining aluminum and steel crank cases and chassis to be inserted into the motorcycle body. And not just stationary work, mind you--they have robots (Auto Guided Vehicles, or AGV's as the acronym-obsessed Indians will call it) that transport crates of materials to workers on the line at predetermined intervals, all part of a complex system that delivers parts where they need to go, when they need to go and allows the plant to be extremely efficient. Having taken an Operations class in business school, I never fully appreciated just how much good logistical planning can accomplish. In class, it was all pizza pies and cookie sheets and who gives a shit? Seeing it in action at Bajaj and understanding how exactly a world-class manufacturer handles output to feed a blossoming economy that wants more and more bikes is a great way to hammer the concept home. And the craziest thing--these precision-engineered, beautifully crafted motorcycles they were churning out every 15 seconds all sell for roughly $1,200, extremely cheap considering that many bicycles in the US cost more than that. Efficiency, cost control, minimal wastage, elimination of defects and accidents, world-class operating standards--seeing that factory makes me proud to sell India's economy as an investment destination.

Ok, that's it. Off for my 1.5 hour, 20-kilometer taxi ride to Powai, which I'm sure will temper my enthusiasm about India's economy. Not a lot, but somewhat. Adios!

Why do Stocks Keep Going Up?

Um, why are the stock markets rallying so much this week? I understand that Europe seems to be reaching a bailout agreement, but has anything changed here in the US? Last I checked, we still had high unemployment, non-existent wage growth, and no job creation to even sniff at. And yet, for some reason, since the US government's debt outlook was lowered on August 5th, US Treasury bonds have rallied and the S&P is roughly flat, while emerging markets--the engines behind global growth and job creation--have faltered. I'm seeing Russia down 25%, Brazil and India down 15%, and China down 10%. Looks like a flight to safety still seeks US debt, even when the US is headed the way of my last dump.

These sell-offs are great for anyone willing to take the risk of EM equities. I'll focus on India for the time being, as that is my trade. Exactly nothing in India has changed since August 5th, save for a moderation of inflation expectations. GDP looks on pace to post another 6.5% or 7.0% real growth for FY12 (that's March '11 to March '12). High-quality companies in the BSE-30 continue to prudently manage risk and generate annual earnings growth in excess of 20%. And India remains nicely de-coupled from the global economy, with only 18% of GDP being linked to exports (compare to China and Korea, where 30% and 50% of GDP is export-linked, respectively). So the quick story--an economy that is growing at 7% on an inflation-adjusted basis (and has grown at above 6% per year for the last 30 years), with plenty of companies armed with the talent and skill to translate that growth to the bottom line, in a country where the lion's share of the growth is domestically driven by the hundreds of millions of people earning higher wages and consuming more goods. What's not to like?

When the flight to safety occurs, India will always suffer. See: Sept. 15, 2008, when Lehman Brothers went belly-up. India's stock market fell 55% in the five weeks following Lehman. Again, what changed in India? The houses that US consumers were no longer buying--were any of those materials produced by India? No. The goods that US consumers stopped consuming--were any of those goods produced in India? No. But because India is viewed as risky, and the entire financial world needed to de-leverage and de-risk, India took the beating. If you had been smart, you invested in India in November, 2008, when the entire world said not to, and doubled your money. When the inevitable sovereign default or bank failure happens in the future, India will take the hit, and I'd advise you to buy it up. But hey, that's just me.