Business

From fortress to fallout: Trump’s trade moves shake dollar confidence

“The Trump administration’s ambitious agenda to reform the international financial system seems almost oblivious to the reality of America’s extreme dependence on foreign capital as reflected in its net international investment position,” said Chris Wood, global head of equity strategy at Jefferies, in a note.

“The global economy is in a weaker position than it was before the tariffs.”Stocks globally have shed trillions of dollars and world markets have gone into a tailspin.

But even if it does prove short-lived, any erosion of the dollar’s standing as a safe-haven is bad news for investors.”The U.S., almost overnight, it seems to have lost its safe-haven attributes,” said Ray Attrill, head of FX strategy at National Australia Bank.In just a week, the dollar has gone from a safe haven to investors’ whipping boy as U.S. President Donald Trump’s chaotic tariffs on friend and foe alike undermine decades of trust in the world’s reserve currency.To be sure, some believe the dollar selloff could be temporary.”The whole premise of the dollar as a reserve currency is being challenged, effectively, by what we’ve seen since Trump’s election,” said Attrill.”By losing or diminishing credibility as a financial safe haven, the willingness of creditors to lend money to the U.S. is reduced,” he said.For those who have piled trillions of dollars into buoyant U.S. markets in recent decades, a sharp dollar fall could result in higher interest rates for longer as price pressures at home persist, which is bad for bonds and equities.But Trump’s recent moves on trade have shaken perceptions. In a matter of days he has imposed hefty tariffs on the world, made an abrupt U-turn on his decision and intensified a trade war with China, throwing into question the reliability of the U.S. administration.”There is … a loss of confidence to some extent … you’re overlaying that with the loss of exceptionalism and the view that in the short-term, at least, it’s the U.S. economy that’s going to be suffering more than any other from what’s happening on the tariff front.”Things are so bad that the U.S. now has to pay investors more to borrow their money than Italy, Spain or Greece.The sudden loss of confidence was nowhere more stark than in the Treasury market, which saw the largest weekly increase in borrowing costs since 1982 as offshore funds fled.Published on April 11, 2025 It was the establishment of the Bretton Woods system in 1944 that cemented the greenback’s global standing. Post-war planners devised a system built on exchange rate stability and deepening international trade and the dollar remained dominant even after Bretton Woods broke down in the early 1970s.”Regardless of how the next 90 days evolve, the U.S.’s international reputation has been eroded,” ANZ group chief economist Richard Yetsenga said in a note.”Once the uncertainty is more or less gone, the tariff rates are set, there’s no back and forth, we’ll see the dollar getting stronger again because the eventuality is that the tariffs are set in place and this is the new normal,” said Francis Tan, chief strategist for Asia at Indosuez Wealth Management.Martin Whetton, head of financial markets strategy at Westpac, said this week’s massive shift in U.S. dollar swap spreads, the “sharp flash-crash” move higher in U.S. Treasury yields and the heavy selloff in the dollar showed “a stripping away of the shield of liquidity and safety”.The dollar, already on course for its worst year since 2017 , on Friday plunged to a decade-low against the Swiss franc and dropped to its weakest level against the euro in more than three years.Foreigners owned trillion of U.S. debt and stocks at the end of 2024.

Published

2 months ago

April 11, 2025

KP News Desk

From fortress to fallout: Trump’s trade moves shake dollar confidence

Photo for representational purposes only

Stocks globally have shed trillions of dollars and world markets have gone into a tailspin. Published on April 11, 2025 “By losing or diminishing credibility as a financial safe haven, the willingness of creditors to lend money to the U.S. is reduced,” he said. Foreigners owned trillion of U.S. debt and stocks at the end of 2024.

“Regardless of how the next 90 days evolve, the U.S.’s international reputation has been eroded,” ANZ group chief economist Richard Yetsenga said in a note.”The U.S., almost overnight, it seems to have lost its safe-haven attributes,” said Ray Attrill, head of FX strategy at National Australia Bank. But Trump’s recent moves on trade have shaken perceptions. In a matter of days he has imposed hefty tariffs on the world, made an abrupt U-turn on his decision and intensified a trade war with China, throwing into question the reliability of the U.S. administration.

Martin Whetton, head of financial markets strategy at Westpac, said this week’s massive shift in U.S. dollar swap spreads, the “sharp flash-crash” move higher in U.S. Treasury yields and the heavy selloff in the dollar showed “a stripping away of the shield of liquidity and safety”.”There is … a loss of confidence to some extent … you’re overlaying that with the loss of exceptionalism and the view that in the short-term, at least, it’s the U.S. economy that’s going to be suffering more than any other from what’s happening on the tariff front.”Things are so bad that the U.S. now has to pay investors more to borrow their money than Italy, Spain or Greece.In just a week, the dollar has gone from a safe haven to investors’ whipping boy as U.S. President Donald Trump‘s chaotic tariffs on friend and foe alike undermine decades of trust in the world’s reserve currency.

“Once the uncertainty is more or less gone, the tariff rates are set, there’s no back and forth, we’ll see the dollar getting stronger again because the eventuality is that the tariffs are set in place and this is the new normal,” said Francis Tan, chief strategist for Asia at Indosuez Wealth Management.It was the establishment of the Bretton Woods system in 1944 that cemented the greenback’s global standing. Post-war planners devised a system built on exchange rate stability and deepening international trade and the dollar remained dominant even after Bretton Woods broke down in the early 1970s.To be sure, some believe the dollar selloff could be temporary.

“The global economy is in a weaker position than it was before the tariffs. “The sudden loss of confidence was nowhere more stark than in the Treasury market, which saw the largest weekly increase in borrowing costs since 1982 as offshore funds fled.”The whole premise of the dollar as a reserve currency is being challenged, effectively, by what we’ve seen since Trump’s election,” said Attrill. For those who have piled trillions of dollars into buoyant U.S. markets in recent decades, a sharp dollar fall could result in higher interest rates for longer as price pressures at home persist, which is bad for bonds and equities.But even if it does prove short-lived, any erosion of the dollar’s standing as a safe-haven is bad news for investors.The dollar, already on course for its worst year since 2017 , on Friday plunged to a decade-low against the Swiss franc and dropped to its weakest level against the euro in more than three years.

Business

TCS, Infosys, Wipro, HCLTech: Why the IT stocks’ correction gathers no moss

With the Nifty 50 scaling 25,000 on Friday and continuing its journey of recouping lost ground from its September 2024 peak, investors in major IT stocks continue to watch from behind. In the last three years, every time the stocks of IT majors — TCS, Infosys, Wipro — have risen, they have done so only to fall again such that their returns are largely flat in this period while the Nifty has zoomed 50 per cent.

Published on June 7, 2025

It’s all relative

Following this, investors would be tempted to think ‘is the correction over?’ While there has been a severe timewise correction in stocks, unfortunately by one metric they are in their most expensive zone in the last 10 years! This may continue to weigh on shareholder returns.Companies to followNot just TCS, but for its major contemporaries as well — Infosys, Wipro and HCLTech — the period FY24-27 will rank amongst their worst three-year period in terms of growth. In this context, with bond yields globally on the rise and providing attractive yields, it might make FPIs look past these stocks.

The charts compare the bond-equity yield spread for the IT stocks from the perspective of a foreign investor, which is the stock’s earnings yield minus the US 10-year bond yield, for the last 10 years. By this measure although stock valuations (barring HCLTech) have corrected significantly from highs, the irony is that on a relative basis they are hovering around their most expensive levels in the last 10 years.

Hunger for growth

Take TCS – its PE today is bang where it was 10 years back, yet when compared to other investible options from an FPI perspective it is unattractive versus 10 years back. Not only this, equally on the unfavourable side is its growth prospects today. In FY2015, TCS delivered constant currency (CC) revenue growth of 17 per cent — that alone on its own sufficiently justified a 25x PE, leaving apart the attractive bond-equity yield spread. To the contrary, its CC revenue growth in FY25 was just 4.2 per cent.The period since GFC triggered the phase of global investor’s hunger for yields as interest rates in developed markets dropped to near zero or even negative levels. Compared to a 10-year government bonds yielding 0 to 2 per cent, even stocks with PE of 30 times or earnings yield (1/PE) of 3.3 per cent (generally viewed expensive in the pre GFC era) suddenly appeared attractive. As long as the earnings yield was above the government bond yield, and it also came with decent and consistent earnings growth, such stocks found strong favour. IT stocks neatly fitted into this spot.As compared to hunger for yields in the era of low interest rates, global investors are now hungry for growth. High payout ratios — like those seen in IT majors that distribute most of their profits to shareholders instead of reinvesting for growth in new businesses — worked well earlier, but may now put pressure on these companies.Investors will be willing to buy stocks/indices with low or negative bond-equity yield spread if the growth prospects are bright, but currently that is missing for IT majors.

Published

1 day ago

June 7, 2025

KP News Desk

Not just TCS, but for its major contemporaries as well — Infosys, Wipro and HCLTech — the period FY24-27 will rank amongst their worst three-year period in terms of growth. In this context, with bond yields globally on the rise and providing attractive yields, it might make FPIs look past these stocks.

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It’s all relative

As their core IT services business faces competition from GCCs, mid-cap IT players and, more importantly, AI-related disruption, growth may remain lacklustre. Slow growth for three consecutive years may also reflect structural changes beyond cyclical factors.Published on June 7, 2025 Take TCS – its PE today is bang where it was 10 years back, yet when compared to other investible options from an FPI perspective it is unattractive versus 10 years back. Not only this, equally on the unfavourable side is its growth prospects today. In FY2015, TCS delivered constant currency (CC) revenue growth of 17 per cent — that alone on its own sufficiently justified a 25x PE, leaving apart the attractive bond-equity yield spread. To the contrary, its CC revenue growth in FY25 was just 4.2 per cent.

Companies to follow

Hunger for growth

As compared to hunger for yields in the era of low interest rates, global investors are now hungry for growth. High payout ratios — like those seen in IT majors that distribute most of their profits to shareholders instead of reinvesting for growth in new businesses — worked well earlier, but may now put pressure on these companies.The period since GFC triggered the phase of global investor’s hunger for yields as interest rates in developed markets dropped to near zero or even negative levels. Compared to a 10-year government bonds yielding 0 to 2 per cent, even stocks with PE of 30 times or earnings yield (1/PE) of 3.3 per cent (generally viewed expensive in the pre GFC era) suddenly appeared attractive. As long as the earnings yield was above the government bond yield, and it also came with decent and consistent earnings growth, such stocks found strong favour. IT stocks neatly fitted into this spot.Investors will be willing to buy stocks/indices with low or negative bond-equity yield spread if the growth prospects are bright, but currently that is missing for IT majors.With the Nifty 50 scaling 25,000 on Friday and continuing its journey of recouping lost ground from its September 2024 peak, investors in major IT stocks continue to watch from behind. In the last three years, every time the stocks of IT majors — TCS, Infosys, Wipro — have risen, they have done so only to fall again such that their returns are largely flat in this period while the Nifty has zoomed 50 per cent.

Business

Volkswagen Golf GTI: Redemption

The cabin isn’t bad, either. A 12.9-inch touchscreen infotainment system is the centrepiece, but it’s programmed to be more than just a large screen on the centre console. Essential features like ESC can be accessed through quick-toggle menus, and while it gives you enough screen real estate for Android Auto and Apple CarPlay, it has permanently placed icons, ensuring you don’t struggle with menus. Both volume sliders and temperature controls are touch-sensitive sliders below the screen. The front cloth seats, albeit a great homage to the first GTI, can feel a bit too tight for some drivers, and with the front seat set according to my height, the rear legroom was substantially reduced.

You won’t be bothered about any of that the moment you set out for your drive. We had access to the NATRAX test centre near Indore for this drive — including the 11.3 km high-speed circuit — and the GTI showed its true colours. The car epitomises flexibility; you can hoon it around a racetrack, and, without making any mechanical changes, drive it to work like nothing happened, and the car will quite obediently follow your lead. The sleek exterior design draws your attention quickly and is also well-proportioned, but not without great hints of aggression, making the car’s purpose quite evident. There are four exterior colours to choose from, its 18-inch alloy wheels are standard, and there’s no dearth of ‘GTI’ badges. An illuminated strip joins the two headlights, making the Golf GTI ever so slightly more dramatic when it gets dark outside. This is further complemented by an illuminated VW logo, while the trademark red strip across the front, the five-pod fog lights, and the fang-like elements on the lower grille work in tandem to ensure that the GTI’s is a face you wouldn’t forget.
The 12.9-inch touchscreen is the centerpiece — more than just a big display, it’s smartly integrated for enhanced functionality
| Photo Credit: Kaizad Adil Darukhanawala 

Start the car in sport mode, and the exhaust has a mild rumble (which isn’t too intrusive), but as revs climb, the engine noise becomes more characterful, and it even emits pops without needing a ‘pops and bangs’ tune from your friendly tuner. The chassis, too, is remarkable, again signifying the Golf GTI’s flexibility. It doesn’t get adaptive dampers, but despite that, the ride is comfortable. In the handling department, the Golf scores quite well. Its nose is eager to follow your steering input although the steering itself feels a bit numb. You can fully deactivate the car’s stability control, but I found that ESC Sport allowed me to push the car without intervening. My only gripe is that while the automatic gearbox is quick to shift, both by itself or when you operate it using the paddle shifters, a car like this deserves to be specced with a manual gearbox.

Balanced dynamics

© Motoring WorldNearly a decade ago, Volkswagen India did the unthinkable. It brought to our market a car that seemed impractical, had fewer doors, and was about four times as expensive as the one it was based on. Despite that, it found many takers, quickly helping it attain a legendary status — so much so that used examples show nearly no signs of depreciation, even a decade later. That was the Volkswagen Polo GTI, and now, nine years later, Volkswagen has brought out another GTI; this time, a more powerful and definitely more focussed one. It is the Mk 8.5 Golf GTI, a front-wheel drive hatchback whose badge is considered synonymous with ‘hot hatch’. We take it out for a drive to understand what the fuss is aboutPublished on June 6, 2025 I’ve always adored the Golf GTI, and I’m certain there are many out there who share the same sentiment. Priced at ₹53 lakh, ex-showroom, the Golf GTI isn’t going to be within everyone’s reach, but you know what, if you’ve wanted one badly (and have the means), you would have booked it already. The first lot of 150 cars coming to India is sold out already, which proves my point.

Published

2 days ago

June 6, 2025

KP News Desk

Nearly a decade ago, Volkswagen India did the unthinkable. It brought to our market a car that seemed impractical, had fewer doors, and was about four times as expensive as the one it was based on. Despite that, it found many takers, quickly helping it attain a legendary status — so much so that used examples show nearly no signs of depreciation, even a decade later. That was the Volkswagen Polo GTI, and now, nine years later, Volkswagen has brought out another GTI; this time, a more powerful and definitely more focussed one. It is the Mk 8.5 Golf GTI, a front-wheel drive hatchback whose badge is considered synonymous with ‘hot hatch’. We take it out for a drive to understand what the fuss is about

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Sleek design

© Motoring World
The 12.9-inch touchscreen is the centerpiece — more than just a big display, it’s smartly integrated for enhanced functionality
| Photo Credit: Kaizad Adil Darukhanawala 

I’ve always adored the Golf GTI, and I’m certain there are many out there who share the same sentiment. Priced at ₹53 lakh, ex-showroom, the Golf GTI isn’t going to be within everyone’s reach, but you know what, if you’ve wanted one badly (and have the means), you would have booked it already. The first lot of 150 cars coming to India is sold out already, which proves my point.

Balanced dynamics

There’s no doubt that Volkswagen has been at the top of its hot hatchback game, and we’re pleased to report that the Golf GTI is unchanged for the Indian market. It’s powered by the EA888 2-litre turbocharged petrol engine, which makes 261 bhp and 37.7 kg-m. It powers the front wheels via a 7-speed dual-clutch automatic gearbox and an electronically controlled limited-slip diff. The sleek exterior design draws your attention quickly and is also well-proportioned, but not without great hints of aggression, making the car’s purpose quite evident. There are four exterior colours to choose from, its 18-inch alloy wheels are standard, and there’s no dearth of ‘GTI’ badges. An illuminated strip joins the two headlights, making the Golf GTI ever so slightly more dramatic when it gets dark outside. This is further complemented by an illuminated VW logo, while the trademark red strip across the front, the five-pod fog lights, and the fang-like elements on the lower grille work in tandem to ensure that the GTI’s is a face you wouldn’t forget. Start the car in sport mode, and the exhaust has a mild rumble (which isn’t too intrusive), but as revs climb, the engine noise becomes more characterful, and it even emits pops without needing a ‘pops and bangs’ tune from your friendly tuner. The chassis, too, is remarkable, again signifying the Golf GTI’s flexibility. It doesn’t get adaptive dampers, but despite that, the ride is comfortable. In the handling department, the Golf scores quite well. Its nose is eager to follow your steering input although the steering itself feels a bit numb. You can fully deactivate the car’s stability control, but I found that ESC Sport allowed me to push the car without intervening. My only gripe is that while the automatic gearbox is quick to shift, both by itself or when you operate it using the paddle shifters, a car like this deserves to be specced with a manual gearbox. You won’t be bothered about any of that the moment you set out for your drive. We had access to the NATRAX test centre near Indore for this drive — including the 11.3 km high-speed circuit — and the GTI showed its true colours. The car epitomises flexibility; you can hoon it around a racetrack, and, without making any mechanical changes, drive it to work like nothing happened, and the car will quite obediently follow your lead.

Business

Bengaluru RCB stampede fallout: Govt suspends top cops, orders CID probe

In the wake of the stampede incident in Bengaluru on Wednesday during the RCB victory celebrations—which resulted in the deaths of 11 people, including a 14-year-old, and left 50 injured, the Karnataka Cabinet has taken several disciplinary and legal actions.

Published on June 5, 2025 A Magisterial inquiry has been initiated, with the Deputy Commissioner of Bengaluru Urban District appointed as the inquiry officer, and the report is expected within 15 days, according to Chief Minister Siddaramaiah, who posted the update on X. As per the order issued yesterday, the Cabinet discussed the matter after preliminary details of the tragedy emerged, and the investigation against the three organisations involved has been handed over to the CID.Earlier today, the BJP criticised the state government and demanded the resignation of Chief Minister Siddaramaiah and Deputy CM D.K. Shivakumar. Karnataka BJP President B.Y. Vijayendra called the celebration “inhumane” and held the state government fully responsible for the tragedy. “The lack of anticipation for lakhs of people is an admission of failure on their part. The CM tried to escape accountability by saying the stampede only occurred at Chinnaswamy Stadium,” he said.Meanwhile, RCB announced a compensation of ₹10 lakh each for the families of the deceased on Thursday. The franchise also set up a fund called ‘RCB Cares’ to support fans injured in the incident. The Karnataka government had already announced ₹10 lakh compensation and committed to bearing the full medical expenses of those injured.Speaking to the media at a press conference after the emergency Cabinet meeting on Thursday, Chief Minister Siddaramaiah said that a one-member commission has been constituted under the leadership of retired High Court judge Justice Michael Cunha. Legal action has also been initiated against representatives of three entities—RCB, event organisers DNA, and the Karnataka State Cricket Association (KSCA). An FIR has been registered, and directions have been issued to arrest those responsible.The government has suspended the Police Inspector of Cubbon Park Police Station, the Assistant Commissioner of Police (ACP) of the area, the Central Deputy Commissioner of Police (DCP), the Additional Police Commissioner in charge of the stadium, and the Bengaluru City Police Commissioner, with immediate effect.

Published

3 days ago

June 5, 2025

KP News Desk

Meanwhile, RCB announced a compensation of ₹10 lakh each for the families of the deceased on Thursday. The franchise also set up a fund called ‘RCB Cares’ to support fans injured in the incident. The Karnataka government had already announced ₹10 lakh compensation and committed to bearing the full medical expenses of those injured.Speaking to the media at a press conference after the emergency Cabinet meeting on Thursday, Chief Minister Siddaramaiah said that a one-member commission has been constituted under the leadership of retired High Court judge Justice Michael Cunha. Legal action has also been initiated against representatives of three entities—RCB, event organisers DNA, and the Karnataka State Cricket Association (KSCA). An FIR has been registered, and directions have been issued to arrest those responsible.A Magisterial inquiry has been initiated, with the Deputy Commissioner of Bengaluru Urban District appointed as the inquiry officer, and the report is expected within 15 days, according to Chief Minister Siddaramaiah, who posted the update on X. As per the order issued yesterday, the Cabinet discussed the matter after preliminary details of the tragedy emerged, and the investigation against the three organisations involved has been handed over to the CID.Published on June 5, 2025 Earlier today, the BJP criticised the state government and demanded the resignation of Chief Minister Siddaramaiah and Deputy CM D.K. Shivakumar. Karnataka BJP President B.Y. Vijayendra called the celebration “inhumane” and held the state government fully responsible for the tragedy. “The lack of anticipation for lakhs of people is an admission of failure on their part. The CM tried to escape accountability by saying the stampede only occurred at Chinnaswamy Stadium,” he said.

The government has suspended the Police Inspector of Cubbon Park Police Station, the Assistant Commissioner of Police (ACP) of the area, the Central Deputy Commissioner of Police (DCP), the Additional Police Commissioner in charge of the stadium, and the Bengaluru City Police Commissioner, with immediate effect.