The below news article happened to catch my eye a couple of days ago, and to me, it looked like the clearest sign that QE3 will not happen.

Chinese Holdings of Treasuries Climbed in April as Fed Purchases Near End:

The Communist nation’s holdings of longer-term notes and bonds rose 0.8 percent to a record $1.149 trillion in April, surpassing the $1.145 trillion held in December, U.S. Treasury data released yesterday show. Holdings of short-term bills maturing in one year or less declined by 32 percent to $3.9 billion, the least since April 2004, the data show.

That, my friends, is a flattener trade, if I ever saw one – lopsided, but still a flattener. (For those readers, who disregarded my disclaimer above, and still proceeding braveheartedly, really, what kicks are you getting out of this?)

And, if there’s anything I learnt from my trade, you just don’t put that kind of money at stake, without have some sort of guarantee from the issuer.

But you could argue, it’s just a net change of $2 billion odd – which really doesn’t make a difference in the market with that sort of liquidity. But taken in context with how China tut-tutted when QE was announced – and then it takes on a new dimension:

Chinese officials, as well as those in Germany and Brazil had been critical of the Fed’s asset purchase plan when it was first announced in November, said the proposal would be inflationary and could hurt the value of dollar-denominated assets. The Fed became the largest owner of Treasuries through what has become known as its policy of quantitative easing, in which bonds were bought to add cash into the economy and reduce the risk of deflation. The purchases end this month.

“One might draw a loose conclusion that they stepped aside at the onset of QE and during the period of time when the economy seemed to be gaining better footing and there were some inflationary concerns,” said Chris Ahrens, head interest-rate strategist at UBS AG in Stamford, Connecticut, one of the 20 primary dealers that trade with the Fed.

And oh, this makes it even more interesting:

Even with the increase, the data “underestimates what China’s buying,” said Scott Sherman, an interest-rate strategist at Credit Suisse Group AG in New York, a primary dealer. “China deals through foreign intermediaries” leading to initial tallies counting their purchases as belonging to other holders, such as the U.K.

All ye i-bankers out there, if you have wasted your precious time reading this sorry blog-post, well, enjoy your free time, while you can. I foresee a lot of work in the coming quarter. (Subject to market conditions. Of course. But ye i-bankers already knew that, didn’t you?)

(Excerpts)

Do IITs, IIMs add value?:

When it is said that the IITs, IIMs owe their eminence entirely to students, not to faculty, it is implied that they do not add value. True or false?

Well, an IIMB director answered this effectively a few years ago when some in the corporate world had made similar statements. He made an offer: he would make public the admissions list the moment it was finalised. Corporates could come and recruit anybody on the list right away. If the IIMs did not add value, neither the students nor the corporates should have a problem doing this. There were no takers. The companies’ bluff had been called.

My comment:

The entities that seem hellbent on taking away the autonomy of faculty and administrators at IIMs, would also have the stated objective of improving the IIMs. Would these entities be taking such steps to cramp the functioning of the faculty if they thought that the faculty = IIT/IIMs? I would think not. This seems to be the origin of the comment.

A suggestion: One way one can keep the hellhounds at bay, is to show to the world how the faculty at IIMs can do better than the students they teach. I am not sure how that can be achieved – maybe have a model system of governance, or hold a summit and then submit whitepapers on the functioning of various institutions of the country – which would add value to these institutions, etc.

Sunrise, as seen from Marine Drive

Taken on my trusty Blackberry, a few days ago, while in a cab on Marine Drive.

Sunset on Marine Drive

Image by kittell via Flickr

The people jogging on the periphery of the maidan, are not your fielders, dogs, slaves, ball-boys, and other such categories of persons. Therefore, we do not take kindly to that horrible lip-puckering sound you use to call us, or the impassioned pleas to your ‘Uncles’, ‘Brothers’ and ‘Friends’ to retrieve the balls you so cleverly managed to hit or kick somewhere in a 1-mile radius of where I am.

And, by the way, it kind of defeats the whole purpose of you coming down to the maidan, if we have to run after the balls, doesn’t it?

P.S.: The girl working out in the corner of the maidan – Really? Is that what you’re going to wear in public? And stretch, contort and other assorted stuff? And you still are surprised by the number of hobos, that turn up to watch your performance?

Image by *TheLibertine* via Flickr

After a long time, I finally remember what Sunday afternoons are about – listening to Rachmaninoff / Tchaikovsky, reading the newspaper and dozing off when you want to, waking up suddenly to discover it’s only 4:00pm and lie back and enjoy the afternoon sun streaming through the fluttering curtains and the cool breeze from the fan whirring away conscientiously, with unfailing regularity.