Ok so it’s time to share a story…
As a kid, never in their life my parents thought that there would be a day when they will send their daughter all alone to anywhere in UP.
Noida was something everyone was afraid of going specifically after sunset.
But cut to present time..
I did my bachelor from amity noida (traveled and stayed till late evening for 4 years)
Last year I visited Varanasi, along with my girl bestie (just two of us) and we enjoyed and stayed at ghats till 10pm
And not even for a second we felt unsafe.
THIS IS WHAT CHANGE LOOKS/FEELS LIKE.
Nobody hired you to have a vision for their organisation. They hired you to execute theirs. The day you confused your job description with a leadership mandate you didn't have, that was the day the politics started. And you never saw it coming.
Just read that Starbucks lost $30B after hiring a McKinsey consultant as CEO.
Guy spent his career advising founders how to build companies, but never built one himself.
17 months later, he’s gone.
They bring in the Taco Bell CEO…
and the market cap jumps $20B overnight.
Turns out running a company is harder than advising one.
Arnab Goswami explains in Hindi why Gautam Adani is targeted by Deep State in a fake scam! 4.40 minutes is all that you need to understand the whole game
Bond math is now key to today's financial markets
Let know if you'd like the sheet.
The table on the right reflects a powerful new dynamic:
If rates fall 50bps, 20yr Treasuries earn 11.3% over the next year.
But if rates rise by 50bps, they lose just 0.9% -- an 11:1 up/down ratio.
The 5 year-average 20yr yield is just 2.5%, compared to today's 5%+ yield.
At that lower history, the same 50bps up/down math sat at just 2:1, much less skewed.
So in the context of recession fears, commodity shock, and mixed econ data, that return skew is drawing cross-asset investors -- hedge funds & asset managers normally less involved in Treasuries.
This competition for capital is one of many mechanisms by which higher rates challenge equity returns.
Several items are pushing long rates up: the rise of JGB long rates, US deficits, persistent inflation, the dollar, and others.
But implicit in the new investor framing of long-bond risk/reward is also the changing impact of the duration math, and the role of convexity across the curve.
Which is worth understanding.
Duration describes the average time it takes to receive any set of cash flows.
Whereas a bond's maturity is simply the date principal is repaid.
As a result, maturity and duration differ if there is a coupon: the larger the coupon relative to the principal (& price), the shorter the relative duration.
So, if a 10yr bond at par has no coupon, its duration is 10 years.
If the same bond has a 10% coupon, its duration is 6.5 years, since much of the total cash investors get comes in every year via coupon.
But the duration has another very useful property:
It also exactly equals the bond price change associated with a 1% change in its yield.
Thus, for the same 6.5 year duration bond, if the yield falls to 9%, the price rises from 100 to exactly 106.5.
The next question is how duration changes:
Is the 6.5 duration constant as yields move from 10% to 9% to 8%?
No -- because the weighted average life has changed at each increment.
This change is the bond's "convexity."
And it is the driver of why a 3% rate fall means a gain of 70%+ while a 3% rise means a loss of just 30%.
You can see that difference in the first chart below:
Red is the duration of a 5% coupon / 5% yield 30-year bond: 16 years.
Blue is the actual bond price across yields.
The difference between the two lines is the effect of convexity:
The price change slows as yields rise
And rises steeply as yields fall.
Next shows the curve of convexity itself shifting across maturities.
Directional views on Treasuries here are a function of growth path, fed policy, and a host of other factors.
Sometimes you make that bet.
But other times, or if you're restricted to markets competing for scarce capital,
Knowing the asymmetries & reaction functions across markets
Improves your ability to anticipate and act
In your area of focus.
That's all for now.
Let know if you'd like the math.
Truly out of this world!
This Ganesh pandal showcases the brilliance of #Chandrayaan3 with working models of the Vikram Lander, Pragyan rover, and Moon Orbiter.
Don't miss the end!
#GaneshChaturthi#GaneshPandal#Chandrayaan#ISRO#Moon
Watch more: https://t.co/AXC5qRuO3J
Chandrayaan-3 Mission:
'India🇮🇳,
I reached my destination
and you too!'
: Chandrayaan-3
Chandrayaan-3 has successfully
soft-landed on the moon 🌖!.
Congratulations, India🇮🇳!
#Chandrayaan_3#Ch3
Chandrayaan-3 Mission:
The second and final deboosting operation has successfully reduced the LM orbit to 25 km x 134 km.
The module would undergo internal checks and await the sun-rise at the designated landing site.
The powered descent is expected to commence on August 23, 2023, around 1745 Hrs. IST
#Chandrayaan_3
#Ch3
India has ₹35,000 crores as unclaimed bank deposits.
To solve this problem,
RBI has launched its UDGAM portal where you can find your unclaimed deposits.
Short thread on how this works 🧵