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Watching the Indian financial networks lately is better then watching the latest comedy flick.  The talking heads are just trying to say something positive but the reality is there is nothing to say. My favorite was on Friday when an HSBC analyst said “inflation could hit 15% but growth should not be impacted much.”

Are you kidding me? Current inflation is 11.42% (a 13 year high) and for it to rise to 15%,  that’s a 31% jump. It’s like saying crude going from USD 140 to 183 is no big thing. Even today, growth is getting affected and if inflation does hit 15% it’s definitely going to dull the “India Shining” story.

Luckily not everyone is so brain dead, an analyst from a local broker had the following rare gem: ”Why would a US fund manager buy ICICI Bank, when he is getting a Citi or Merrill a lot cheaper?”

One of the big growth stories for the past 3-4 years in India has been the rise of automotive component manufacturing companies.  However, with the slow down of the US automotive market all 3 companies (Chrysler, Ford and GM) are all getting taken to the cleaners.  Last week GM’s stock hit a 53 year low, I would imagine the guys over in Detroit aren’t ordering as many parts as they did last year.  So much for the “decoupling” theory that was being tossed around a couple months back on TV. 

After my recent vacation I’m now pushing maximum density (borrowed from the Breakfast Club) and decided to try something new. Even before the trip I’d been looking to start yoga classes and have been dragging my feet. Then I heard about the Wii Fit and thought it might be cool. After actually seeing the launch of the Wii Fit in NYC on May 19, I decided I would buy it and see how it goes.  

However, that was easier said then done.  I stood in line for an hour at Best Buy to buy the Wii Fit and my dad stood in line at Toys R Us for the Wii. After getting it to Bombay and using it for the past week it’s pretty damn cool. It has a bunch of yoga positions and strength training exercises. The yoga exercises are really good because the Wii Fit balance board checks your center of balance and let’s you know if you are doing them correctly. It’s no substitute for a gym but a great way todo some activity if you are feeling to lazy to head to the gym.

I’ve decided to publicly keep track of my weight and BMI as reported by Wii on the right side of this blog.  I need to get my a#$@# in shape if I really want to run the Mumbai Marathon in Jan 2009.

A couple days ago I was called an iHole - someone who can’t stop talking about their iPhone.  Well it continues…By now I’m sure you’ve been slammed with iPhone coverage and heard the latest version is being released on July 11. People love the iPhone because the interface is so natural, it doesn’t ship with a 60 page manual b/c it’s just that easy to use.  

The latest phone has two big things going for it: GPS and AppStore.  Let’s take AppStore first, it has an easy to use interface to select and download programs to the iPhone platform.  I had a CrapBerry for 3 years and never downloaded any programs to the phone for 2 reasons: not many developers on that platform and more importantly no easy way to get programs on the phone.  With GPS the whole location based services market will grow exponentially.  Yes, Nokia has GPS on some of their phones but only a handful of applications were taking advantage of it. Once the iPhone started talking about it tons of developers jumped on the location based services bandwagon. An example of a great restaurant app from Urbanspoon.

iPhone has changed the game and the carriers love it and will probably do whatever they can to switch CrapBerry users to the iPhone platform.  Imagine you are a carrier today and have a CrapBerry user that is paying USD 30/month for the service and part of that goes to Research in Motion.  Now, if that user switches to an iPhone the carrier gets the full amount and even willing to charge less for the data plan since the carrier gets the whole enchilada…genius.

The Sensex was down over 515 points today to hit a low for the year - 14571.29.  The reason for the bearish performance was inflation, the gov’t announced inflation was 11.05% a 13 year high mainly on the back of increased gas prices.

But the fun doesn’t stop there, several people I’ve spoken to are putting their India expansion plans on hold because everything is so fu!@#$ expensive. Real estate is the biggest hurdle for most businesses and prices are still sky high and are set for a STEEP fall.  Take a look at some of the real estate stocks - Omaxe, Ansal, Parsvnath, DLF, HDIL, Shobha, Kolte-Patil and Puravankara are all down 60%-80% from their highs.  During the run up in these stocks many people forgot that most real estate transactions in India occur in the black - meaning under the table.  I laughed when the real estate guys started listing b/c it would be like Pablo Escobar listing his drug trade.  Granted your product is good and clients are happy, but they are paying you under the table and last time I checked the Big 4 accounting companies don’t like that.

The Senator from Vermont, Bernie Sanders, decided to ask his constituents “how are things going” in light of the high price of oil.  He didn’t expect much of a response but soon received over 600 emails that talked about their plight.  Several of the response are below:

“By February we ran out of wood and I burned my mother’s dining room furniture.”
“It costs me so much money in gas that my wife and I live on $6 per day to eat.”
“My mortgage is behind, we are at risk for foreclosure, and I can’t keep up with my car payments.”

Although many people from the US can sympathize with the anecdotes, I showed the same document to many Indians and the response was the same - Why do they live so far away, why do they have 2-3 cars for a family of 2, why did they buy big houses…ouch no sympathy here. However, most still want to emulate the American dream.

When I first saw the email I thought it was a joke. However, the entire document is available on Senator Bernie Sanders website. Direct link to PDF. 

After a long vacation I’m finally back in Bombay and back to my regular blogging schedule. Over the next few weeks I’ll be dropping in a couple posts from my travels to Italy and the US, the highs and the lows.  It was a great time and got to see many friends and relatives.  Got a ton of pics as well and sifting through them all to find some gems to post. 

While countries like Hong Kong are lowering taxes and attracting MORE business the locals in Bombay feel the opposite works. In yet another attempt to drive people out of the city the Bombay Muncipal Authority (BMC) is debating whether to tax rental rates at 41.5%.  The way they are planning to tax people is the following:

Rs 100,000 - Residential rent
Rs 41,500 - The additional amount someone has to cough up and pay as the BMC Tax
Rs 33,000 -  Income tax paid by the lessor on the Rs 100,000

The gross rent would be Rs 141,500 and after taxes the net amount to the landlord would be Rs 67,000, a staggering 53% tax rate.  You can be the judge on how many people will actually end up paying this amount.

In HK you actually get something in return, but in Bombay that ain’t the case, below are some of the services offered by the BMC:

• Building and maintenance of streets and flyovers - Been to Bombay? Then you know there is more turbulence on the roads then the airspace
• Public municipal schools - scary, NO ONE I know sends their kids to these schools
• Water purification and supply - EVERY house has their own water purifier
• Hospitals - if by hospital you mean a place to get urgent care, then don’t visit a BMC hospital
• Street lighting - drive from Bandra to Mahim at midnight on the main road
• Maintenance of parks and open spaces - What parks are they talking about?
• Sewage treatment and disposal - right into the ocean
• Garbage disposal and street cleanliness - HAHA

Anyways, you get the point. 

I keep referring to the BMC but in reality the name was changed several years back to MCGM (Municipal Corporation of Greater Mumbai) but 99% of the population still refer to it as the BMC.  Either way the acronyms have their own meaning:

BMC - Badly Maintained City
MCGM - Maharashtrians Can’t Govern Mumbai

And where does the head honcho of this organization stay - Carmichael Road (aka M.L. Dahanukar Marg).

People use the newspaper as a source of information but if you were looking to buy property in Bombay the papers were of no use. Below are two recent front page headlines:

Friday, May 2nd (Times of India) - Flat prices frozen till Diwali
Saturday, May 3rd (DNA) - Property prices head south, fall of 15-20%

The Times of India article indicates that an informal agreement was in place between the local builders to keep rates at current levels.  The undertone of the article is “buy now, why wait till October because the rates will be the same” if people really believe that they have no clue what is happening in the global property market.  Rates will fall in Bombay, the question is how much and how quickly.

Pujit Agarwal of Orbit Corporation the company behind the Arya building shown was quoted 24 hours later in the DNA newspaper. He said rates have fallen 15-20% in certain parts of Bombay such as Lower Parel and Santa Cruz and as much as 30% in places beyond Kandivli and Borivli. 

Amazing how quickly things turn in the Indian property market…or more appropriately how useless the local newspapers are for anything.

I wrote about Mukesh Ambani’s monster home called Antilla back in June 2007.  At that time I mentioned the house was “estimated at USD 1 billion dollars - that figure is definitely way off.” I was right, in the latest Forbes magazine there is talk the house (if you can call it that) will be closer to USD 2 Billion (Rs. 8,000 CR) not the paltry billion dollars.

The renderings in the Forbes article of Antilla are pretty cool looking, based on some pictures I took over the past week the structure is ONLY 50% complete as compared to the renderings. 

Click for pictures of the current status of Antilla as it’s being constructed. 

This ain’t no amateur style food fight but on a global scale.  Rice, wheat and corn are at near record highs.  Oil this week touched USD 120 a barrel and is currently around USD 112.  Riot’s have broken out in some parts of the world for food, i’m a bit surprised nothing like that has happened here in India.  With 80% of the Indian population earning less then USD 1 dollar a day, food ends up costing more as a percentage of daily spend as prices rise for those 80%.

In 2008, 24% of all corn harvested in the United States will be used for biofuel.  And that number will hit 32% by 2009.  People are starving and to take something that could keep people alive and instead turn it into fuel for Ferrari’s and Ford’s seems a bit short sighted.

The above thumbnail (when clicked) shows the oil production for the past 40 years and you can see not much has really changed in light of increased population, cars, data centers, industrial complexes, etc…stuff that needs oil.

Apparently, oil companies are REALLY bad at predicting demand and producing enough supply.  Funny how Toyota, Sony and other manufactures can predict customer demand and scale their operations to meet targets. I guess something to do with lack of competition.