Confused Fed, costly chemicals and more - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Confused Fed, costly chemicals and more

Jun 27, 2008

US Fed maintains status quo
While rising inflation forced the Reserve Bank of India (RBI) to hike the repo rate and the CRR, the US Fed has kept interest rates unchanged at 2% for the time being. Readers would do well to note that the subprime meltdown had prompted the Fed to resort to a series of interest rate cuts that began in September 2007. While rising inflation has stopped the Fed from cutting interest rates further, concerns over a slowing US economy has prevented it from raising rates either; hence no change has been effected in the rates. As per the International Herald Tribune, Fed chief Bernanke has quoted, "Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased." The European Central Bank, on the other hand, has signaled a hike in interest rates to rein inflation. This could prove to be a dampener to the US as the interest rate differential between Europe and the US would increase, weakening the dollar and increasing the value of goods imported into the US. Testing times for the US indeed!

  • Also read- Fed Reserve's quandary

    Dow ready for a 25% leap
    No, this isn't the famed US stock market benchmark we are referring to. Instead, it's the biggest chemical maker, Dow Chemicals, in the US and its decision to raise prices by up to 25% in July. This is believed to be the largest ever price hike undertaken by the company in its long history. Infact, it has joined a growing list of companies that are finding it difficult to absorb higher costs arising from higher raw material and energy prices. Recently, global miner, Rio Tinto and Chinese steelmaker Baosteel, entered into an agreement whereby the former will supply iron ore at a price that has been revised upwards by 97%. This will most likely be the benchmark for other similar deals as well. The latest round of price hikes highlights the problem that the world is facing currently on the inflation front. So far, the developed world was shielded from inflation on account of shifting work to low cost countries like India and China. But now, even these countries are facing higher inflation and are finding it difficult not to pass on cost increases. Furthermore, rising income levels here are putting additional pressure on prices. Looks like it will require some bold steps by central banks across the world in order for this menace to be tamed.

    Sugary sales
    India, the world's second-biggest sugar producer, is expected to export a record 4.2 m tonnes of sugar in the current crop year, exceeding earlier estimates of 3.5 m tonnes. Interestingly, India's sugar exports had never crossed the 2 m tonnes mark prior to this year. In fact, it will now surpass Australia, the world's third largest sugar exporter. It is also making strides in the export of raw (unrefined) sugar, which alone are expected to be 2.3 m tonnes this year. It entered the raw sugar export market in 2007 by selling to Dubai's Al Khaleej, the world's largest refinery, which has now switched to India from top producer Brazil.

  • Also read- Is the Sugar Sector turning sweet?

  • Equitymaster requests your view! Post a comment on "Confused Fed, costly chemicals and more". Click here!


    More Views on News

    The Top 6 Artificial Intelligence Plays in India (Views On News)

    Dec 6, 2021

    Investors looking to tap into AI theme need to keep an eye on tech firm leveraging the power of AI are making things possible.

    6 Penny Stocks that Rallied 1,000%+ in One Year (Views On News)

    Dec 6, 2021

    These penny stocks shed their penny status by surging 1,000% or more in the last one year.

    6 Popular Stocks that Turned into Penny Stocks (Views On News)

    Nov 27, 2021

    A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

    How to Prepare for a Stockmarket Pandemic in 2022 podcast (Views On News)

    Dec 6, 2021

    The transition from a small correction to a market crash to a bear market may be without any warning.

    SEBI Issues Operating Norms For Silver ETFs. Here is All You Should Know (Outside View)

    Dec 6, 2021

    SEBI has issued operating norms for Silver ETFs to ensure uniformity of the schemes.

    More Views on News

    Most Popular

    Infosys vs TCS: Which is Better? (Views On News)

    Nov 26, 2021

    In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

    This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

    Nov 24, 2021

    Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

    6 Popular Stocks that Turned into Penny Stocks (Views On News)

    Nov 27, 2021

    A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

    India's Top 5 Monopoly Stocks to Watch Out for (Views On News)

    Nov 30, 2021

    These 5 companies dominate their sectors with a huge piece of the pie.

    5 Indian Companies Embracing Blockchain Technology (Views On News)

    Nov 23, 2021

    Blockchain adoption in India was slow in the past. Now, the technology is being well received.


    Become A Smarter Investor
    In Just 5 Minutes

    Multibagger Stock Guide 2022
    Get our special report Multibagger Stocks Guide (2022 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Dec 6, 2021 (Close)