When bad news from US is good news for all others

A growing #US economy is a good news for India , rest of the world because the Amercian market is the top destination for the world exports. Yet, when the latest US # job data signals weakness in the economy, the global  # stock markets rejoice. Why ? Because #Fed would not raise interest rates by, say 25 bps. While this kind of rate hike, if at all takes place, should have been discounted in any case,  markets being markets, they clutch on to anything , that is short-term because they have a short vision.

Yet, when it comes to advising others, the experts would tell you to take a long term view!.

So far as India is concerned, the US is among the top two destinations for the merchandise #exports and the number one destination for the IT exports, the lifeline of Gurgaon, Pune, Chennai, Bengaluru and aspiring # IT hubs.  So, pick up in the American economy , in a way, is as much essential as perhaps our domestic economy. 

The so-called domestic consumption “story “ often touted by experts is a much of a function of the US economy because IT and other soft exports to the US gives that much money in the hands of the young #Indian middle class and millions employed in the software and services.

Yet the stock market would like to have party when bad data is placed before Fed Reserve chief #Janet Louise Yellen so that she puts off for at least till 2016 the longest awaited hike in the #lending rates.

India’s merchandise exports are down in the dumps with a de-growth of 16.17 per cent for April-August , 2015-16 . On top of it,# NASSCOM has projected slowdown in job creation in the IT sector. In this backdrop, should we seek a recovery in the US economy , even if the Fed hikes interest rates, or should we jump about the weak data, that could mean more troubles for our IT and merchandise exports to the world’s number one economy.

Well, that is how markets operate!  

pic courtesy: Janet Yellen FB page