Arvind's Newsletter-Weekend edition

1.SBI set to borrow $1.25 billion, India’s largest dollar-denominated bank loan in 2024

The bank is looking for a five-year loan, which is being arranged by CTBC Bank, HSBC Holdings and Taipei Fubon Bank with an interest margin of 92.5 basis points at the risk-free Secured Overnight Financing Rate, reported Bloomberg on Friday.

This loan will be used for general corporate purposes at its branch in Gujarat International Finance Tec-City (GIFT City), the report said.

2.Delhi beats Lahore to become world’s most polluted city with AQI levels touching 1000

India shut down primary schools in its capital Thursday as smog worsened over New Delhi. The air pollution was so bad that flights were diverted and views of the Taj Mahal obstructed. New Delhi officially passed Pakistan’s Lahore this week to become the world’s most polluted city, due to emissions mixed with smog from nearby farms, where rice straw is burned to clear land and prepare it for the next season, The Times of India reported.

Hazy skies and unhealthy air quality levels were also reported across other Southeast Asian cities, including Hanoi and Bangkok.

3.India’s growing wealth divide

India’s growing affluent population and their outsized influence on the nation’s growth story is becoming the envy of many major markets.

The nation’s ultra-wealthy population — or people with at least $30 million — rose to 13,263 people in 2023, a 6.1% jump from the year before, data from Knight Frank shows. This number is slated to surge 50.1% between 2023 and 2028, making it the fastest growth rate for UHNWIs in the world, the same report stated.

These individuals are subtly driving India’s economic progress through their consumption patterns and investment behaviors.

Beyond the hype and expectation of growth, however, is the challenge of widening economic inequality.

The top 1% of income earners in India accounted for an unprecedented 22.6% of the overall income generated in the country between 2022 and 2023, a study by the World Inequality Lab (WLI) revealed. India’s metric is one of the highest in the world — surpassing levels in the United States and emerging markets like Brazil and South Africa.

4.China’s flagging economy showed signs of life

China’s economy is showing signs of rebalancing as consumption growth nearly caught up to factory output, in an upswing that now depends on how much more stimulus Beijing may deploy in the event of a tariff shock when Donald Trump returns to the White House in 2025. Retail sales grew at the strongest pace in eight months, after Beijing introduced measures such as subsidising purchases of equipment, appliances and cars. 

Home-price declines abated for a second month in October. To be sure, industrial output rose 5.3%, lower than forecast. But the strength in retail spending is a boost to a part of the economy that has trailed growth in production, which has long benefited from Beijing’s manufacturing-focused policy support.The question now is whether these green shoots for China will grow fast enough to meet the nation’s annual growth target of around 5%.

5. The US economy’s persistent strength is leaving other nations in the dust and reshaping global markets

Comments by the Federal Reserve chair describing US growth as “by far the best of any major economy in the world”came as Goldman Sachs projected the country would outpace other rich nations for a third straight year.

Traders reduced their bets that the Fed would cut rates next month. Meanwhile, slowing growth in Europe — coupled with the impact of potential Trump tariffs — drove forecasts for aggressive rate cuts in the eurozone. This has fuelled a growing belief that the euro will fall to parity against the dollar. Overall, US stocks are outperforming their European peers by the most in 30 years, according to Bloomberg.

6.Disney's streaming business is hitting its stride

Disney has long been a giant in the film and television business, but it has struggled to find its footing as the entertainment industry shifted towards streaming as a primary consumptive method. But now the company is hitting its stride in the tech-forward entertainment world.

Last quarter, its streaming unit turned a profit for the first time. But the big prize this quarter is that Disney+ in particular, five years into its existence, is now in the black as well.

Will this bright spot be enough to overcome the conglomerate’s other struggles in the midst of its leadership transition?

7.OpenAI is developing an AI ‘operator’ that performs everyday tasks

OpenAI to launch AI-powered agent capable of independently carrying out tasks, such as booking travel and sending emails; "Operator" to launch in January, compete with similar products from Anthropic and Microsoft.

The planned release is part of a broader industry push toward agents, or AI software that can complete multi-step tasks for users with minimal supervision. Anthropic unveiled a similar agent that can process what’s happening on the user’s computer in real time and take actions on their behalf. OpenAI-backer Microsoft Corp. also recently launched a set of agent tools designed to send emails and manage records for workers. And Alphabet Inc.’s Google is said to be preparing to release an AI agent, according to The Information.

8.Google's Gemini AI chatbot now has an iPhone app

Google launched its artificial intelligence-powered Gemini chatbot as an iPhone app this week, offering the service for free in 35 languages worldwide.

Through the app, users can access Gemini Live — a new voice assistant that handles natural conversations with interruptions and topic changes. The feature offers ten distinct voice options and supports 12 languages, including Spanish, Arabic, and Hindi, with more planned.

Google’s premium image generator, Imagen 3, comes integrated with the app. A new Extensions feature connects Gemini with other Google services like YouTube and Gmail in single conversations.

9.What’s about to hit the world economy? The Economist

CRITICS ACCUSE Donald Trump of being too chaotic to get much done. The speed of his first appointments should disabuse them. The next administration means business.

Stock and corporate-bond markets are broadly delighted with the prospect of deregulation and tax cuts in a second Trump term. The Economist, by contrast, has warned of a risk that mass deportation and a global trade war would do real harm. The appointments themselves attest to Mr Trump’s desire for disruption, a hard line on China and absolute loyalty . With such a concatenation of signals, you may wonder what is about to hit the world economy.

The answer comes in three instalments, beginning with Mr Trump’s intentions. His commitment to deregulation may be good for growth. Elon Musk, the world’s richest man, and Vivek Ramaswamy, an entrepreneur-politician, have been named heads of a new outfit grandly named the Department of Government Efficiency, or DOGE. A pledge to cut $2trn from the government’s annual budget is patently absurd, but judicious liberalisation could be benign. On day one the new administration could speed up legislation on permitting that is already in Congress. Mr Trump has also promised to free up artificial intelligence. The technology is immensely power-hungry. Just imagine if easier planning rules helped unleash a revolution.

Unfortunately, Mr Trump also wants to deport millions of irregular migrants and impose tariffs of up to 60% on China and 10-20% on the rest of the world. All of these would be bad for growth. For example, the costs of mass deportation could, by one estimate, run to hundreds of billions of dollars. That does not include the economic burden of labour shortages and spiralling consumer prices. Roughly half of the workers on America’s farms have no legal status.

A second part of the answer is that the tensions in Mr Trump’s agenda will be resolved by necessity, as the hyperbole of stump speeches comes into contact with the messy reality of governing. Policies take so much effort to enact that his administration will simply be unable to do everything all at once.

Imposing universal tariffs will take time, because they would need approval from Congress or the use of untested presidential powers. But free-trade Republican lawmakers could recoil at tariffs on America’s close allies. And the use of existing law to impose a universal tariff on national-security grounds would probably be challenged in the courts. Likewise, apprehending, detaining and processing millions of people will be a logistical nightmare. Federal agencies would need to turn to state authorities for help, many of which will refuse.

The third part of the answer is that, mixed in with the intentions and priorities is the mercurial temperament of Mr Trump himself. He has a fondness for picking favourites and then dumping them. He is also beholden to nobody. In spite of his appointment to the White House of Stephen Miller, a longtime loyalist and a hardliner on immigration, Mr Trump may put growth first by making a furious noise about deportation, but limiting its real-world effect. It is the same with Mr Musk, whom markets sense may receive special favours. But will the bromance last? The only discipline on a president who has succeeded so spectacularly by defying the experts around him will be those same markets. Mr Trump has an old-fashioned regard for share prices as a barometer of success.

The conclusion markets seem to be drawing is that things will work out just fine. Although they are alive to risks of inflation and cronyism, investors are betting that tariffs and deportations will do little damage. Instead, the tax cuts will produce a sugar rush that boosts corporate profits and deregulation will bring about lasting growth.

Even if that prediction proves correct about America—a fairly big if—it is too rosy for the rest of the world. As America borrows, raises tariffs and grows, the dollar will strengthen. That will dampen trade. It will also lead to higher interest rates and greater dollar-debt burden in developing countries.

Some governments will be in the line of fire, especially if the threat to extend tariffs beyond the universal rate becomes a Trumpian negotiating tool. Most vulnerable is Mexico, which will be a target both of Mr Trump’s immigration policy, because many illegal migrants cross its border with the United States, and of his trade policy, because Mexico is home to factories that send their exports north under the United States-Mexico-Canada Agreement.

Mr Trump appears to have a special animus against the snooty leaders of the European Union. Many Republicans allege that, by footing the bill for American troops in Europe as part of NATO, America is in effect paying for European welfare. For Mr Trump, the EU’s huge trade surplus with America rubs salt in the wound. Europe can expect to pay.

The main target of a hostile economic policy will be China. Marco Rubio, at the State Department, and Mike Waltz, as national security adviser, both want the rivalry between the world’s two biggest economies to be at the heart of American policy. As firms move supply chains out of China, a few countries may benefit. Others may strike up a friendship with Mr Trump. As a rule, though, the separation of the American and Chinese economies would be highly disruptive.

Countries would do well to prepare for what is coming. The eu has said that it will steer tens of billions of euros’ worth of spending to defence. But it has fallen badly behind in AI and has put off strengthening its own internal market for too long. China is in a better position, but it has foolishly delayed the stimulation of domestic demand.

If Mr Trump unleashes a salvo of tariffs, retaliation will exert a seductive pull, not least as a show of strength. It would, however, be an act of self-harm. Few countries are more insulated against trade shocks than America, with its large domestic market. Better to take the positive side of Trumponomics, and deregulate. If Mr Trump wants to tilt the playing-field, the best way to cope will be to become more competitive. ■