Personal finance insights: Market sentiments, investment strategies & economic trends

Dr K C Gupta, YBB Personal Finance

SENTIMENTS

AAII Bull-Bear Spread +14.0% (reversal; above average)
$NYA50R, NYSE %Above 50-dMA 53.17% (positive)
$SPXA50R, SP500 %Above 50-dMA 51.60% (positive)
Delta MSI 48.0%% (negative)
ICI Fund Allocations (Cumulative)
OEFs & ETFs: Stocks 61.41%, Hybrids 4.27%, Bonds 17.40%, M-Mkt 16.92%

INTEREST RATES

CME FedWatch
Cycle peak 5.25-5.50%
Current 4.25-4.50%
FOMC 1/29/25+ hold
FOMC 3/19/25+ hold

Treasury

T-Bills 3-mo yield 4.35%, 1-yr 4.17%; T-Notes 2-yr 4.27%, 5-yr 4.43%, 10-yr 4.63%; T-Bonds
30-yr 4.85%
TIPS/Real yields 5-yr 1.91%, 10-yr 2.20%, 30-yr 2.47%
FRNs Index 4.260%
US Savings I-Bonds, Rate from 5/1/24 – 10/31/24 is 4.28%; the fixed rate is 1.30%, the
semiannual inflation is 1.48%.

For current banking rates, see www.depositaccounts.com/

Stable-Value (SV) Rates, 1/1/25
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.25%, RA 5.00%
Flexible RCP 4.50%, SRA 4.25%, IRA-101110+ 4.50%
TSP G Fund 4.625% pending (previous 4.250%)
Due to publication lag, the data above are as of the Sunday preceding.

MARKETS

The US stock rally has resumed. People are still digesting dozens of Executive Orders by the incoming US President TRUMP.

INDIAN stocks now in a correction (10-20% down from the 09/2024 high). A death-cross is imminent – that’s when the 50-dMA crosses the 200-dMA on the downside. Near-term technicals & fundamentals have turned negative.

After being relatively stable from late-2022 to late-2024, RUPEE’s decline has accelerated.
Weak rupee will benefit Indian exports but will make imports costly. India’s TRADE RATIO is about 46% (exports + imports as % GDP) & TRADE DEFICIT (exports – imports as %GDP) is high at 7.4% of GDP. As a net importer, weak rupee is negative for Indian economy. Oil import (#1) costs are rising. Gold is also a major import (#3).

The current Barron’s has positive outlook on India despite the temporary headwinds & mentioned the ETF INDA. The US retail investors may be better off with rupee-hedged small ETF INDH with small limit-orders.

ECONOMY

Pressure on RUSSIAN OIL exports will continue with new sanctions imposed on January 10 on oil in floating tankers (the shadow fleet). This oil was bought mostly by India & China; note that oil can trade under sanctions with the $60 price-cap.

India’s oil import costs would rise & rupee may weaken because it won’t be able to use rupees or rubles for non-Russian oil. Indian imports of Iranian oil would also decline. India has good foreign currency reserves, but expensive oil paid in dollars would be a burden on Indian economy.

As some INDIAN TARIFFs are high, the new US counter-tariffs may be high. The new US tariffs would be on friends & foes. This policy ignores other countries’ revenue structures. India has duty/tariffs on imports as well as on domestically produced luxury items. It has poor tax compliance & tariffs/duties act like consumption tax that cannot be avoided. Gita GOPINATH (IMF) said that India can reduce tariffs on many items to participate in global supply-chains.
An additional threat is high US tariffs if BRICS proceed with a BRICS currency to compete with the dollar. But that’s a controversial topic even within the BRICS.

Indian Government (Central & States) & businessmen had good representation at WEF 2025 in Davos with “Invest India” theme while many other countries curtailed participation. There were global concerns about the new US tariff & immigration policies. India has announced that it will buy more crude oil from the US & Middle East & will take more than 18,000 illegal Indian nationals identified by the US.

India is countering China’s 50,000 MW hydroelectric project (to be China’s & world’s biggest) on Yarlung Tsangpo (Brahmaputra) in Tibet with 11,000 MW hydroelectric project (to be India’s biggest) on Siang (Brahmaputra) in Arunachal Pradesh. There are dangers to 2 massive dams not far from each other in the earthquake-prone hilly area.

IT/TECH

Byju Raveendran’s IT education startup Think & Learn (Byju’s) raised $1+ billion from the US investors in late-2021. It over-expanded rapidly & got into trouble. After it delayed its financial reports & skipped interest payments, its creditors forced it into bankruptcy in mid-2023.
But the creditors found that most of the cash had already been siphoned off to overseas
accounts, much of it while the bankruptcy proceedings were ongoing. Byju’s said that those were payments for prior services (but different rules apply after bankruptcy filing). There are lawsuits & criminal investigations for fraud, bribery, witness tempering both in the US & India.
The creditors would be lucky to recover 10-15% of the money owed.

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