Arvind’s Newsletter

Seasons Greetings and Best wishes for the New Year for all my subscribers

1.Disney, Reliance sign non-binding agreement for India media operations merger: Economic Times

The deal is likely to be completed by February, with Reliance aiming to finish the process by the end of January, subject to regulatory approvals, it said.

Under the merger Reliance would own 51 percent through a combination of shares and cash, with Disney holding the remaining 49  percent, giving more control to Indian billionaire Mukesh Ambani's Reliance group, the newspaper said.

2.FPI investment in Indian Equities hits a record high in 2023

A combination of strong earnings and economic growth, coupled with hopes of the Federal Reserve ending the rate-increase cycle towards the end of 2023, has made the gross buying of Indian equities by foreign portfolio investors (FPI) of Indian equities hit a new record. In 2023, FPIs have been gross buyers of shares worth Rs 25.5 trillion, the highest ever buying in any calendar year. The FPIs also sold shares worth Rs 23.9 trillion. On a net basis, FPIs were net buyers worth Rs 1.6 trillion, the highest since 2020. In 2022, FPIs were net sellers worth Rs 1.25 trillion.

3.Israel intensified its operations in Gaza, as humanitarian officials voiced worry over a growing crisis in the enclave and Israel’s leader acknowledged his military was paying a “very heavy cost.” 

Gaza’s health ministry said at least 70 people were killed in an Israeli air strike that hit a refugee camp, a report Israel said it was investigating. Israeli officials, meanwhile, said more than 150 soldiers had been killed in a “complex and complicated” months-long war. In all, more than 20,000 Palestinians have been killed in the fighting, which erupted after Hamas killed more than 1,100 people in an Oct. 7 attack in Israel.

The number of dead is equivalent to 1 out of every 100 people living in Gaza before the war. Almost 2 million Palestinians have been forced to flee their homes, the United Nations has reported, and new reporting by the New York Times alleges Israel bombed areas where it told Palestinians to seek safety, using 2000 pound bombs.

Still, talks over a truce continued, with Hebrew-language media reporting Egypt having proposed a multi-stage cease fire that would lead to the release of all remaining hostages held by Palestinian militants and the cessation of hostilities. The fighting has meant that Bethlehem, the purported birthplace of Jesus Christ in what is now the Israeli-occupied West Bank, has canceled Christmas celebrations to show solidarity with those in Gaza. “There is no joy left in our hearts,” one resident of the town told Al Jazeera.

4.Geopolitical instability is likely going to worsen in the coming months, an array of analysts warned. The lack of a lone global superpower means “the world has entered its most volatile and dangerous period since the height of the Cold War, Goldman Sachs’ Jared Cohen and Eurasia Group’s Ian Bremmer argued in Foreign Policy, while two prominent energy analysts wrote in Foreign Affairs that the transition to clean energy will involve a scramble for resources that is already “upending geopolitics.” The French investment bank Natixis said, meanwhile, that “geopolitical bad actors” were the biggest risk to economic growth in 2024, according to its own survey of 500 investors.

5.Sales of physical books are booming, despite the rise of e-books. 

The growth of the Amazon Kindle and other e-readers in the early 2000s was predicted to kill off print books and, perhaps, the independent bookstore. But print book sales are up 10-14% over last 3 years across English-speaking markets, an industry analyst told CBC: Nice numbers “for an industry that many people thought was dying.” Surprisingly, e-readers are more popular among older people — being able to make the text bigger is a plus for the varifocal generation — while younger readers, driven by the growth in genre fiction and young-adult novels, and by social-media trends like “BookTok,” are buying print books in ever-greater numbers.

6.The Rise And Fall Of The ‘IBM Way’

As someone who has worked for IBM I read with interest, Deborah Cohen’s review the book ‘The Greatest Capitalist Who Ever Lived’, a biography of Thomas Watson Jr, the CEO of IBM in the middle of the 20^th century, in the Atlantic.

Under Watson Jr, IBM rose to being a computing giant in the post war era, before succumbing to the innovator’s dilemma when it let a the then tiny Microsoft dominate the era of personal computing. The book seems to attribute both the rise and fall of IBM to Watson Jr’s personality.

First, the success to his risk-taking ability:

“In the early 1960s, he made a bet-the-company gamble on the decision to produce a fully compatible line of computers, the System/360. The System/360 has been described as one of the greatest product innovations in 20th-century American history, next to the Ford Model T. Achieving compatibility across a wide array of processors was an engineering nightmare, requiring millions and millions of lines of code. IBM’s investment was equivalent to $50 billion today, more than twice the cost of the Manhattan Project. The new computer made every one of the company’s other lines obsolete, meaning that if the System/360 didn’t work as anticipated, IBM stood to lose its clientele to other firms.

When the System/360 line finally shipped after many reversals, including problems in both the engineering and manufacture, it proved an instant success. From 1964 to 1970, IBM added almost 120,000 new employees (for a total workforce of 269,000), and its revenues more than doubled, from $3.2 billion to $7.5 billion, unprecedented growth for a major corporation.

Tom Watson Jr. was in the Soviet Union, serving as President Jimmy Carter’s ambassador there, when IBM’s executives made the disastrous deal with Bill Gates. Watson wrote an unusually frank memoir, Father, Son & Co., which in 1990 spent 14 weeks on the New York Times best-seller list. By that time, IBM—“my company,” he still called it—was a wounded giant. Overinvested in the mainframe business during the 1980s, Watson’s successors failed to capitalize on the PC and its software, forfeiting a huge consumer market. As IBM’s fortunes sank in the early ’90s, Watson Jr. would wake up crying at night. He died in 1993 after a stroke.

Lou Gerstner, the executive who took on the job of rescuing IBM that same year, was respectful about the Watsons’ leadership. But in his own memoir, he left no doubt about the damage their six-decade reign had caused. The contention-management system had failed: The bad feeling it created led to a habitual avoidance of conflict rather than a frank airing of alternatives. The lifetime guarantee of employment had ossified into an entitlement, and Gerstner insisted on its formal end.”