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<ul class="summary-list"><li>Hedge fund managers who do best in choppy markets are not convinced by the post-election euphoria.</li><li>These managers, like $16 billion firm Universa Investments, believe warning signs are flashing.</li></ul>The first Donald Trump administration included policy announcements via Twitter, a pandemic, and protectionist tariffs that agitated the country's largest trade partner.His second term could be even more "radical" for markets, according to Jonathan Webb, an executive at portfolio technology company C8 Technologies and the former head of FX strategy at Jefferies."The backdrop is already a more volatile FX market," Webb said, comparing markets to when Trump was inaugurated the first time in January 2017. Higher interest rates, struggling European economies, and global inflation have created a more volatile world regardless of who won the election."Throwing Trump in, even moreso," Webb said.For managers that trade volatility and hedge against market crashes, these types of conditions are normally when their strategies come into play. But market volatility is at its lowest levels since July, according to the VIX index, Wall Street's favorite measure of uneasiness. Assets from US stocks to bitcoin are hitting all-time highs despite the economic backdrop — the Federal Reserve cut rates in September, indicating a slowing economy — being far from ideal."When people think things can't go down, that's when you start to worry," said Brandon Yarckin, the chief operating officer of $16 billion tail-risk asset manager Universa Investments, in an interview with Business Insider. He pointed out that billionaire Warren Buffett's Berkshire Hathaway is sitting on more cash than ever before — a sign that the Oracle of Omaha thinks markets are overvalued."There's a lot of kindling for a crash out there," Yarckin said.The euphoria and fear of missing out on the rally means investors are not knocking down the door of those who thrive in chaotic conditions. Universa has demand for its strategy currently, Yarckin said, but it's coming from "a small subset of people."Simon Aninat, a volatility portfolio manager for Natixis affiliate Seeyond, said clients haven't asked to revive a long-volatility strategy that performed well during the early days of the pandemic, but was closed in mid-2023 due to a lack of demand. Firms such as Universa soared during COVID — the Mark Spitznagel-led strategy returned <a target="_blank" href="https://markets.businessinsider.com/news/stocks/black-swan-fund-universa-investments-4000-percent-return-hedging-coronavirus-2020-4-1029076165">more than 4,000%</a> in the first quarter of 2020, for example."We know there's going to be bumps in the road during a Trump administration, but it's hard to be sure that there'll be a big spike of the VIX above 40," Aninant said. Instead, clients are more interested in the firm's short-volatility fund, which does well when markets stay calm.It's "counterintuitive," Aninant said, given Trump's management style, but clients believe the President-elect's policies mean "the S&amp;P will continue to rise."Allocators should be looking for "not necessarily spicy but uncorrelated strategies," said Mattias Eriksson, a former BlueCrest partner who cofounded C8 Technologies in 2017."He was tweeting a lot back then, and he created a lot of intraday volatility within the market," Eriksson said, referring to Trump's first term.Now, Eriksson's colleague Webb said, there's the potential for even more out-of-the-box policies given the presence of people like Tesla founder Elon Musk in Trump's orbit, and the fact Trump does not have to worry about reelection."I wonder if this is being underestimated" by the markets, Webb said."It's certainly an experiment."

Markets are ripping past all-time highs after Donald Trump's electoral victory. Doomsday investors aren't convinced.

<ul class="summary-list"><li>JPMorgan's top strategist had something positive to say about stocks for the first time in a while.</li><li>JPMorgan chief equity strategist Dubravko Lakos-Bujas said investors should get less defensive.</li></ul>Strategists at JPMorgan <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-risk-fed-hawkish-policy-error-marko-kolanovic-2022-10?utm_medium=ingest&amp;utm_source=markets">have been bearish on the stock market</a> since October 2022.But that seems to be changing, based on a Tuesday note from <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/jpm-stock?miRedirects=1&amp;utm_medium=ingest&amp;utm_source=markets">JPMorgan</a> chief global equity strategist Dubravko Lakos-Bujas.While Lakos-Bujas didn't update his firm's year-end <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> price target of 4,200, which implies a steep 27% decline from current levels, he did recommend investors turn less bearish on the market."We are neutralizing our long Defensive and short Cyclicals view," Lakos-Bujas said.The Federal Reserve cutting interest rates and <a target="_blank" class="" href="https://www.businessinsider.com/china-stimulus-fix-economy-xi-jinping-stock-market-2024-10">China unleashing new stimulus measures</a> are driving the change in Lakos'-Bujas' sentiment."Policy support from the world's largest economies are coming at a time of surprisingly resilient US growth with tight labor markets, ongoing government deficit spending, and record highs across equities, credit, and housing," Lakos-Bujas said.The bank also pointed to the solid health of US consumers, who have <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/americans-richest-theyve-ever-been-with-164-trillion-net-worth-2024-9">collectively added $50 trillion to their wealth since Covid.</a>According to data from the Federal Reserve, US consumers have about $185 trillion in assets, made up mostly of stocks and bonds, homes, and cash, and just $21 trillion in debts. That's <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/americans-richest-theyve-ever-been-with-164-trillion-net-worth-2024-9">a healthy balance sheet.</a>Lakos-Bujas is also encouraged by solid corporate earnings growth, which is expected to accelerate from 3% over the past two years to 12% over the next two years."US corporates have been increasingly focused on recycling pre-tax income into investment spending rather than returning after-tax profits to shareholders through buybacks, which is also helping to stimulate the economy," Lakos-Bujas explained.Part of that has been driven by the AI tech boom, with mega-cap tech companies expected to accelerate their R&amp;D and capex investments to more than $500 billion per year."In our view, these drivers, along with US Exceptionalism, are helping offset the uneven macro weakness," Lakos-Bujas said.He added: "While it is too soon to assume that this is a turning point, it does suggest that a recession is unlikely in the near term, especially since surprisingly strong job growth and a downtick in the unemployment rate broke a slowing trend in the job market."But Lakos-Bujas didn't turn completely bullish on stocks. The strategist warned that the November Presidential election could inject volatility into markets depending on the outcome, and lower interest rates could represent a headwind for corporate profits, particularly in the financial sector.

One of Wall Street's biggest bears is turning upbeat on the stock market for the first time in 2 years

<ul class="summary-list"><li>Commercial real estate transactions are gradually recovering, Moody's said.</li><li>The firm cited continued weakness in the office sector, where vacancy rates remain at record highs. </li></ul>The embattled commercial real estate market may finally have a few things going its way, according to recent data.A <a target="_blank" href="https://cre.moodysanalytics.com/insights/market-insights/the-cre-outlook-new-normals-the-fed-and-the-latest-performance-data/">Moody's analysis</a> cited that declining transactions have bottomed, with year-on-year sale volumes now positive for the first time in two years. In the second quarter, the four core real-estate sectors notched $64 billion in transactions — marking 9% upside turnaround.That's not to say all is bright. The credit rating agency noted persistent weakness in the office space, as last quarter's vacancy rates hit another record high of 20.1%. However, national office utilization has increased enough to stabilize the market.Post-COVID norms have been the chief culprit behind office sector strain, as remote work became an entrenched part of US corporate culture. With fewer employees using the office, buildings lost tenants. That left owners with harder-to-pay debt, made worse by high interest rates and tighter bank lending. Defaults have not <a target="_blank" href="https://www.businessinsider.com/commercial-real-estate-debt-property-losses-mortgage-interest-rates-prices-2024-7">been uncommon</a>.And yet, lending volumes are slightly improving, Moody's said.Second-quarter mortgage origination volumes are up 3% year-to-year, an improvement that was led by commercial mortgage backed securities. In the same quarter, they've jumped 155% on an annual basis.Moody's expects that banks lending could turn positive by the end of 2024. That may be welcome news for Wall Street, as fear has mounted of a distress wave looming over smaller dealers. As these lenders are most exposed to commercial real estate, some analysts have warned that <a target="_blank" href="https://www.businessinsider.com/real-estate-ceo-scott-rechler-regional-banks-commercial-real-estate-2023-3">hundreds of banks risk failing in the next few years.</a>Now, some see opportunity in the real estate market.Analysts at KKR agree that sector conditions have bottomed, but predict that banks will become limited participants in the market moving forward. If these dealers reduce lending to 30% of the market, that would create a $300 billion gap, the firm said."We think this will be an attractive vintage for real estate credit," analysts Matt Salem and Dakota Sagnelli wrote, later adding: "A growing number of commercial real estate transactions should increase the number of opportunities to lend, while the dearth of bank capital should keep yields attractive and spreads relative to corporate credit elevated."For instance, KKR noted that spreads on B-level CMBS assets have widened 400 basis points since 2022.If investors are concerned about risk, the analysts pointed out that valuations have reset. Meanwhile, the market owes 30% less money than it did in 2022's first quarter when prices were near a peak."For lenders, this means a larger equity cushion and a smaller overall debt burden. We are often lending at some 50% of peak valuations," the note said.

It looks like the commercial real estate market has finally bottomed out — and experts say it's time to invest

<ul class="summary-list"><li>Investors should beware of a contested US election, BlackRock's Jean Boivin told Bloomberg TV on Thursday.</li><li>He joins a chorus of market strategists predicting volatility if election results are delayed.</li></ul>Investors are dismissing the risk of a disputed US election, BlackRock Investment Institute head Jean Boivin told <a target="_blank" class="" href="https://www.bloomberg.com/news/videos/2024-10-24/blackrock-s-boivin-on-us-election-risks-for-markets-video">Bloomberg TV</a> on Thursday."For us, the main thing to watch is really more the contested election scenario that could be weeks of very disrupting legal battles," he said.Boivin added: "I don't think that's in the price and that's where if you want to prepare for some scenario where you need to react, I think that's one of those scenarios that could be bad for markets."The possibility is not far-fetched, with Donald Trump and Kamala Harris locked in a razor-close contest. Recent <a target="_blank" href="https://www.businessinsider.com/harris-trump-presidential-election-swing-state-polls-sun-belt-2024-10">battleground state polling</a> shows a race too close to call with the election less than two weeks away.Overall, he considers it a "fool's errand" to try and trade on what happens come November.However, that hasn't stopped investors from trying: recent weeks have seen the so-called "<a target="_blank" href="https://markets.businessinsider.com/news/stocks/donald-trump-trade-rally-betting-markets-kamala-harris-bitcoin-djt-2024-10?_gl=1*1bjr9iu*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcyOTY4Nzg0MS43NTYuMS4xNzI5NjkxNDUyLjYwLjAuMA..">Trump trade</a>" rise on the prospect that the Republican candidate will win, as suggested by betting markets.Other market strategists have echoed in recent weeks Boivin's concern over what an election dispute would mean for markets.According to <a target="_blank" class="" href="https://www.morganstanley.com/ideas/presidential-election-2024-market-forecasts">Morgan Stanley</a>, delayed results have historically triggered short-term volatility. The CBOE Volatility Index — also known as the stock market's fear gauge — spiked 40% during the 2020 election. The measure only eased when a winner was officially declared days later.In another example, Stifel's chief Washington policy strategist Brian Gardner noted that the equity market sold off during the 2000 election dispute between George W. Bush and Al Gore. The S&amp;P 500 fell approximately 5% between Election Day and December 13th, when the Supreme Court ended the legal challenges.However, Gardner points out that macroeconomic backdrops might play a hidden role in these scenarios. In 2000, stocks were steering through the dot-com bubble's rupture. Meanwhile, stocks rose during Trump's election dispute in 2020, likely due to signs that the COVID-19 pandemic was ending."The main takeaway for investors is that the dominant economic and market conditions at the time drove the financial markets rather than political events," he <a target="_blank" href="https://www.stifel.com/Newsletters/AdGraphics/InSight/Potomac-Perspectives/2024/PP_102224.pdf">wrote</a> on Tuesday.As of now, current macroeconomic strength has shifted outlooks on the Federal Reserve's rate-cutting path, leading the bond market through a <a target="_blank" class="" href="https://markets.businessinsider.com/news/bonds/treasury-yields-bonds-interest-rates-economy-inflation-election-labor-market-2024-10">steep sell-off</a>.

A contested election that leads to weeks of uncertainty is a risk being overlooked by markets

Unprotected at the margins of the rental market

<ul class="summary-list"><li>This post originally appeared in the Insider Today newsletter.</li></ul>Welcome back! If you were among the "<a target="_blank" href="https://www.businessinsider.com/instagram-goodbye-meta-ai-train-generative-post-copypasta-profile-2024-9">Goodbye Meta AI</a>" posters on Instagram this week, I regret to inform you that it won't actually protect your data from being used to train AI. But I respect the effort.By the way, BI's subscription promotion ends tomorrow — <a target="_blank" rel="noopener" href="https://www.businessinsider.com/subscription/limited-offer">don't miss out</a>.In today's big story, Wall Street's big bet on China <a target="_blank" href="https://www.businessinsider.com/china-xi-jinping-stimulus-plan-wall-street-stock-market-economy-2024-9">might be fool's gold</a>.What's on deck:<ul><li>Markets: Trump and Harris both want the <a target="_blank" href="https://www.businessinsider.com/kamala-harris-donald-trump-crypto-bitcoin-donors-young-men-2024-9">crypto community in their corner</a>.</li><li>Tech: This chart shows how Netflix is <a target="_blank" href="https://www.businessinsider.com/netflix-stock-historic-high-chart-streaming-2024-9">absolutely crushing the streaming wars</a>.</li><li>Business: Everything thing you need to know about the potential strike <a target="_blank" rel="noopener" href="https://www.businessinsider.com/dockworker-strike-what-will-be-impacted-prices-inflation-martime-longshoremen-2024-9">that would upend supply chains</a>.</li></ul>But first, I just can't quit you.If this was forwarded to you, <a target="_blank" href="https://www.businessinsider.com/subscription/newsletter/insider-today">sign up here.</a><h3 id="7fa5f018-5b05-4a37-a8dc-d3f89138bcb3">The big story</h3><h2 id="5fd547b9-ec52-41fc-8e08-4f4b27dd8097">Here we go again</h2><div type="image" title="Xi Jinping holding a sparkler, preparing to launch a large cannon-fired Chinese Yuan Currency cash ball" height="1500" width="2000" msid="113821338" hostid="261" sizebytes="65812"></div>Just when Wall Street thought it was out, China is pulling it back in.US financial firms' interest in China was on its last legs, <a target="_blank" href="https://www.businessinsider.com/china-economy-aggressive-monetary-stimulus-interest-rate-rrr-2024-9">but a new stimulus package</a> has some investors excited again.The immediate impact of China's $114 billion package, which includes cutting interest rates and reducing the amount of money banks need to keep in reserve, has been big. But Business Insider's Linette Lopez isn't sold on <a target="_blank" href="https://www.businessinsider.com/china-xi-jinping-stimulus-plan-wall-street-stock-market-economy-2024-9">this being the start of a turnaround</a>.The fix is more of a bandage than anything else, as it doesn't address key economic issues plaguing the country.Reducing bank reserve requirements means more loans can be issued, but accessing capital isn't the problem, Linette writes. China's dumpster fire of a property market is what has consumers stuck in place.The majority of Chinese household wealth is invested in property (70%), which is a problem considering housing prices have fallen as much as 30% in Tier 1 cities.In short, Chinese consumers' money is tied to assets dropping like lead balloons, which doesn't make them keen to spend money.If you're still buying into the China hype, consider this: The stimulus package isn't that big.The government spent more than $1 trillion in the wake of the finance crisis and $157 billion in 2012 on infrastructure projects.As Linette puts it, "The problem does not match the price tag here."<div type="image" title="Inside a shopping mall in China." height="2845" width="4265" msid="113821331" hostid="261" sizebytes="892590"></div>Still, that's not stopping some Wall Streeters from diving back into China.Hedge fund billionaire David Tepper is <a target="_blank" href="https://markets.businessinsider.com/news/stocks/david-tepper-buys-chinese-stocks-country-launches-fiscal-stimulus-bazooka-2024-9">extremely bullish on the investing situation in China</a> after the most recent stimulus package, describing it as a buy "everything" moment.He's not alone. Traders, investors, and speculators have sent China's stock market to its <a target="_blank" rel="noopener noreferrer" href="https://www.businessinsider.com/china-boost-economy-stock-market-bazooka-stimulus-sentiment-rally-pboc-2024-9">best month in nearly a decade</a>, signaling that the market players think that Beijing's moves are a "bazooka."Most analysts agree that more will need to be done to keep the good times rolling. (Tepper, for what it's worth, acknowledged as much, noting that People's Bank of China governor Pan Gongsheng "promised to do more and more and more."What that looks like remains to be seen. The key gap in the current policy remains <a target="_blank" href="https://www.businessinsider.com/china-economy-stimulus-stock-market-consumer-deflation-outlook-real-estate-2024-9">fiscal support for China's discouraged consumers</a>, writes BI's Filip De MottIn the meantime, Wall Street's on-again-off-again relationship with China will prevail. As frustrating as the country can be to investors, too much opportunity exists for financiers to turn their back on it forever.So even if this latest crop of China believers gets burned, there will likely be another group willing to follow in their footsteps. After all, maybe this time will be different.<h3 id="77f31a4c-8462-4e3d-a71f-838cb79493fb">News brief</h3><h2 id="1fcd294b-3f53-425f-9f20-4093e8623b59">Top headlines</h2><ul><li>Hamas says its leader in Lebanon was <a target="_blank" href="https://www.businessinsider.com/hamas-says-leader-in-lebanon-killed-in-israel-air-strike-2024-9">killed in an Israeli strike</a></li><li>Globe Life hit with EEOC finding it "created, condoned" a work environment that is <a target="_blank" href="https://www.businessinsider.com/eeoc-finds-globe-life-created-hostile-work-environment-for-women-2024-9">abusive to women</a>.</li><li>The unsung warriors of <a target="_blank" href="https://www.businessinsider.com/price-is-right-bob-barker-models-sexual-harrassment-me-too-2024-9">'The Price Is Right.'</a></li><li>Apple no longer in talks to invest in OpenAI: <a target="_blank" rel="noopener" href="https://www.businessinsider.com/apple-falls-out-talks-invest-openai-wsj-report-2024-9">report</a>.</li><li>Who was Hassan Nasrallah, <a target="_blank" rel="noopener" href="https://www.businessinsider.com/who-was-hassan-nasrallah-the-hezbollah-leader-killed-by-israel-2024-9">the Hezbollah leader killed by Israel</a>?</li><li>Threads joins X in blocking posts to apparently <a target="_blank" rel="noopener" href="https://www.businessinsider.com/threads-blocks-jd-vance-leaked-links-2024-9">leaked documents about JD Vance</a>.</li></ul><h2 id="8120060b-ae66-48dc-b149-f0489a30ffa2">3 things in markets</h2><div type="image" title="Four of the rising stars in a photocollage" height="1500" width="2000" msid="113821334" hostid="261" sizebytes="562898"></div><ol><li>Ones to watch on Wall Street. Our annual list of Wall Street rising stars is here. We identified 25 of the top traders, investors, and dealmakers aged 35 and under. <a target="_blank" href="https://www.businessinsider.com/top-wall-street-executives-rising-stars-investing-trading-2024">Check out the full list</a>.</li><li>The fight for crypto bros' votes. Crypto might not matter to most voters, but for those who do care, it matters a lot. That's why former President Donald Trump and Vice President Kamala Harris are both dedicating resources <a target="_blank" href="https://www.businessinsider.com/kamala-harris-donald-trump-crypto-bitcoin-donors-young-men-2024-9">to court the crypto-community vote amid a tight race</a>.</li><li>The math ain't mathing on Trump Media's valuation. The company's nearly $3 billion market cap "seems unjustifiable," a chief global strategist said, considering its reported sales of $837,000 last quarter and a net loss of $16.4 million. What's worse, the political nature of the company <a target="_blank" href="https://markets.businessinsider.com/news/stocks/trump-media-stock-valuation-unjustifiable-even-after-70-drop-strategist-2024-9">means it has limited upside</a>.</li></ol><h2 id="f4b54806-7f81-450c-ba32-92560d4fae9b">3 things in tech</h2><div type="image" title="A photo collage of Elon musk, the Twitter logo, and the SpaceX spaceship" height="1500" width="2000" msid="113821333" hostid="261" sizebytes="171566"></div><ol><li>Elon Musk's "autocratic" style is an asset. His fixations are a threat. A new book by a veteran space journalist outlines SpaceX's success under Musk, who's described as a "mercurial leader." While his "autocratic control" of the company helped it gain dominance, his veer to the political right and fixation on X <a target="_blank" href="https://www.businessinsider.com/elon-musk-spacex-autocratic-style-success-politics-harm-2024-9">could undermine that dominance</a>.</li><li>OpenAI execs were reportedly worried the company could collapse when Ilya Sutskever left. Sutskever, the company's cofounder, left in May. According to a new report from The Wall Street Journal, <a target="_blank" href="https://www.businessinsider.com/openai-execs-worried-company-collapse-ilya-sutskever-left-report-2024-9">executives attempted to woo the AI researcher back</a> before rescinding the offer.</li><li>The streaming wars have a clear winner. Netflix is crushing the competition, but its victory was far from assured. The streamer's fortunes have changed astronomically in just a little more than two years — and <a target="_blank" href="https://www.businessinsider.com/netflix-stock-historic-high-chart-streaming-2024-9">it's left the competition in the dust</a>.</li></ol><h2 id="9260fa45-d397-4b3c-b4f8-4bb193976216">3 things in business</h2><div type="image" title="A man walks out of a store with a cart full of items, greeted by police officers outside." height="1000" width="1333" msid="113821336" hostid="261" sizebytes="39328"></div><ol><li>The war on "organized retail crime." Since the COVID-19 pandemic, retailers and law enforcement have been cracking down on retail theft, calling perpetrators "criminal masterminds." <a target="_blank" href="https://www.businessinsider.com/americas-war-organized-retail-crime-target-cvs-victorias-secret-2024-9">But those who commit these crimes are often homeless or mentally ill</a> — and some say this crackdown has effectively criminalized poverty.</li><li>Ready. Set. Strike. The International Longshoremen's Association, the largest union of maritime workers in the US, <a target="_blank" rel="noopener" href="https://www.businessinsider.com/dockworker-strike-what-will-be-impacted-prices-inflation-martime-longshoremen-2024-9">is set to start striking Tuesday</a> if its wage demands aren't met. Even a two-week strike would disrupt supply chains into 2025, according to one expert.</li><li>Medical bills are more negotiable than you think. You can negotiate your salary, and some people even haggle on things like cell phone bills and rent. When it comes to medical bills, though, many people accept the cost at face value. But healthcare experts told BI that <a target="_blank" href="https://www.businessinsider.com/how-get-medical-bills-reduced-negotiate-challenge-payment-plan-2024-9">pushing back on pricey bills is actually worth a shot</a>.</li></ol><h2 id="1ad7b482-3f4b-44b4-81b6-a864aa386478">In other news</h2><ul><li>Elon Musk wants to put people on Mars by 2030. <a target="_blank" href="https://www.businessinsider.com/elon-musk-spacex-plan-colonize-mars-dont-count-on-it-2024-9">Don't count on it</a>.</li><li>Brat summer is over. <a target="_blank" href="https://www.businessinsider.com/brat-summer-over-gen-z-fall-office-fashion-wish-list-2024-9">Here's what Gen Z's wearing to the office this fall</a>.</li><li>Is Mark Zuckerberg still obsessed with efficiency? <a target="_blank" href="https://www.businessinsider.com/meta-mark-zuckerberg-efficiency-obsession-wifi-password-2024-9">Check Meta's WiFi password</a>.</li><li>A record number of apartments will hit the market this year. <a target="_blank" href="https://www.businessinsider.com/apartments-record-us-housing-affordability-crisis-home-prices-real-estate-2024-9">That's great news for real estate affordability</a>.</li></ul><h2 id="9f5d80ac-3466-429f-a50a-2ffbb70c65ff">What's happening today</h2><ul><li>Fed chair Jerome Powell will speak at the National Association for Business Economics annual meeting.</li><li>The US fiscal year ends.</li><li>Ryan Routh, the man accused of attempting to assassinate Donald Trump on his golf course earlier this month, is arraigned on gun charges.</li><li>A court hearing for son of Mexican drug lord El Chapo on charges of drug trafficking and money laundering.</li></ul>The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. Grace Lett, editor, in Chicago. Amanda Yen, fellow, in New York. Milan Sehmbi, fellow, in London.

China's $114 billion stimulus package immediately boosted its stock market. But can it last? 

Deciding whether to rent or buy a home is one of the biggest financial choices most people will make. It’s not a straightforward decision, especially when considering the rapid increase in <keyword id="21530105" type="General" weightage="20" keywordseo="rental-prices" source="keywords">rental prices</keyword> in some of India’s biggest cities. Let’s dive into how the cost of renting has risen compared to buying, and whether it's still worth it to rent or if it’s time to start looking at <keyword id="20879400" type="General" weightage="20" keywordseo="homeownership" source="keywords">homeownership</keyword>. <h2>Soaring renting costs</h2>If you’re renting in cities like Bengaluru, Pune, or Kolkata, you might have noticed something frustrating — your rent seems to keep going up. According to <keyword id="20974307" type="General" weightage="20" keywordseo="ANAROCK-Research" source="keywords" meta.keywordsubtype="org" meta.entityname="ANAROCK Research" meta.hostid="261" meta.entityid="ANAROCK Research">ANAROCK Research</keyword>, in several of India’s top cities, rental prices have jumped significantly, even more than <keyword id="21006188" type="General" weightage="20" keywordseo="property-values" source="keywords">property values</keyword> in some places. For example, in Bengaluru’s Sarjapur Road, average monthly rents shot up by 67% between the end of 2021 and the middle of 2024. If you were paying Rs 21,000 in rent at the end of 2021, that would now be around Rs 35,000 a month! And Bengaluru isn’t the only city where renters are feeling the squeeze. In Pune’s Hinjewadi, rent prices have surged by 52%, while property values went up by just 31%. Similarly, in Kolkata’s EM Bypass, rents rose by 46%, but property prices saw a much smaller bump of 15%. But there are cities where buying makes even more sense because property prices are outpacing rental costs. In Hyderabad’s Gachibowli, for instance, while rent went up by 50%, property values soared by 70%. This trend is also seen in NCR’s Sohna Road, where rents increased by 40%, but property prices grew by 54%. <h2>Is renting really worth it?</h2>Let’s say you’re living in a 2BHK flat in Bengaluru, paying Rs 50,000 a month in rent. It might seem like an okay deal at first, but when you look at the long-term cost, things get tricky. Dr Prashant Thakur, Regional Director &amp; Head of Research at ANAROCK, breaks it down: "One-year payable rent for the individual is Rs 50,000 x 12 = Rs 6,00,000. For the next 10 years, the total rental outgo, including an annual rental increase of 7%, will be around Rs 83 lakh. This rental outgo is almost 69% of the total cost of this property — and this is just an expense with no investment value accrued." <div type="Article" hostid="261" msid="113367496" title="I bought my dream home, but the difficult process and higher cost sometimes make me wish I&amp;#39;d stuck with renting" mstype="2" mssubtype="0"></div>What does that mean? If you keep renting, you’re essentially throwing money out the window without gaining any ownership of the home. While you may have the flexibility that comes with renting, your hard-earned money doesn’t build any long-term value. <h2>Is it time to make the home purchase leap?</h2>So, what if you took the plunge and bought the place instead? Let’s say you’re eyeing a Rs 1.2 crore apartment and can afford to put down a 20% down payment, with the rest coming from a 10-year home loan at 9.5% interest. Dr. Thakur explains, “If the individual opts to buy the property via a home loan, has the financial wherewithal to make a 20% down payment, and borrows the remaining amount over a 10-year tenure at 9.5% interest rate, such a purchase is definitely profitable. Instead of spending a huge amount on rent, the individual can pay monthly EMIs and ultimately own the physical asset after a ten-year period.” With this approach, the monthly EMIs may be slightly higher than what you’re paying in rent, but there’s a key difference — you’re working towards owning your home. After 10 years, the home is yours, and you don’t have to worry about rent going up year after year. <h2>Homeownership isn’t just about the numbers</h2>While the math might lean towards buying, it’s not just about finances. For some people, renting makes more sense, especially if they don’t plan to settle down in one place for a long time. Job mobility, financial stability, and lifestyle choices all factor into this decision. However, something interesting happened during the COVID-19 pandemic. Many people, including millennials who had previously been all about renting, started reconsidering. The pandemic brought a sense of uncertainty, and suddenly, the security of owning a home became much more attractive. Dr. Thakur points out, "Amid a rising aversion to high-risk investments, an increasing number of tenants see rent as an expense, and EMIs as SIPs towards a non-volatile asset." <div type="Article" hostid="261" msid="113395713" title="Welcome to interest-rate cut week: Here&amp;#39;s how the Fed&amp;#39;s next move will impact everything from home prices to new cars loans" mstype="2" mssubtype="0"></div>Plus, home loan interest rates are currently lower, averaging between 8.75% and 9.5%, making homeownership more affordable than it has been in the past few years. And let’s not forget the tax benefits: Homebuyers can avail of deduction on principal repayment, interest charges, and a further deduction of Rs 50,000 for first-home buyers. The answer, as with most things, isn’t black and white. Renting offers flexibility, especially if your job might take you to a new city in a year or two. But with rents rising sharply in cities like Bengaluru, Pune, and Chennai, buying might be a smarter option in the long run. If you’re financially ready to make a down payment and secure a home loan, investing in a home could save you from steep rental hikes and give you the stability of owning a property.

Should you rent or buy a home? Here’s how much rental pricing has gone up compared to ownership cost in major Indian cities

<ul class="summary-list"><li>The S&amp;P 500 is fresh off its worst weekly decline since March 2023.</li><li>But Deutsche Bank is offering four reasons to stay positive even as recession fears flare.</li></ul>It's an uncomfortable time for equity investors, with the S&amp;P 500 fresh off its biggest weekly decline in 18 months.Although the Federal Reserve is on the brink of long-awaited rate cuts, concerns have crept into the market that the economy is at risk of a sudden unpreventable softening. Deutsche Bank cites those fears as having fueled last week's equity-market jitters.The firm also notes that downturns have historically offered little warning, even when conditions seem fine, and says August's disappointing jobs data provided little security.With that all established, the firm says there are still five reasons for investors to feel optimistic about the economy and road ahead.<ol><li>Job growth remains stable</li></ol>Declining labor data has fractured faith in a soft landing, with Wall Street concerned that a jobs-led slowdown signals a broader downturn ahead.But the perceived decline in job growth isn't as noticeable as some might lead on, Deutsche said.Although payrolls data between April 2023 and March 2024 was lowered 818,000 last month, this downside revision is much more benign when spread out, Deutsche noted:"We'll have to see the full monthly breakdown of that, but it actually means the apparent decline in job growth is less severe once that is accounted for. So the path of payrolls is somewhat flatter than it appears," analysts wrote.The bank said that if these revisions were spread evenly throughout the year, three-month average nonfarm payrolls would remain virtually flat since November 2023.<ol start="2"><li>The stock market's decline has been narrow</li></ol>The market's opening performance last week may have spooked investors, but the plunge was not shared equally among sectors, Deutsche noted.Although the S&amp;P is down 4.25% since August's close, the popular Magnificent 7 stocks suffered a broader a 5.58% drop. This cohort comprises large-cap names that have soared when risk-on sentiment was stronger.But with interest rate cuts ahead and recession fears in the air, investors are more likely to reposition.In this context, Deutsche cited that Bloomberg's 60:40 bond portfolio fell less than 2%, having reached an all-time high on Friday. This could indicate a rebound in fixed-income, as investors gear up for looser borrowing costs.<ol start="3"><li>Rate cuts are on the horizon</li></ol>All of Wall Street appears to be bracing for the Federal Reserve to <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">lower rates</a> at its policy meeting next week. The impact of this is already being felt, Deutsche said."The US 10yr Treasury yield closed at 3.71% on Friday, the lowest since June 2023. And the effects of lower yields are already filtering through into the real economy," analysts wrote. "For instance, data from the Mortgage Bankers Association shows that a 30yr mortgage rate is currently at 6.43%, the lowest since April 2023."Of course, rate cuts could be perceived as a sign that the Fed is racing to stop a recession, but Deutsche sees no sign of this among other central banksGlobally, most have delivered a limited 25-basis move, an unlikely move if there was widespread economic alarm.<ol start="4"><li>Recession indicators: Not what they were</li></ol>Deutsche also pointed out that several indicators have been <a target="_blank" href="https://www.businessinsider.com/recession-indicators-perfect-track-records-sahm-yield-curve-conference-board-2024-9#the-sahm-rule-3">flashing warnings of an impending recession</a>, though a cooldown is yet to show. This has stirred debate among analysts for months now, with a number questioning whether these guaged are trustworthy in the current cycle."There's been a lot of debate as to why this might be, and whether the post- Covid economy is behaving differently somehow. For example, perhaps consumers were cushioned by the pool of excess savings built up in the pandemic," Deutsche said. "But whatever the reason, this shift in how the economy has behaved relative to prior cycles is making it more difficult to rely on these leading indicators."Examples include the Sahm Rule, which signals a recession when the three-month moving average in the unemployment rate climbs 0.5% from a 12-month low. Although this recently happened, the model's own <a target="_blank" href="https://www.businessinsider.com/claudia-sahm-rule-profile-recession-indicator-unemployment-rate-interest-rates-2024-8">founder dismissed it as a false positive</a>.

4 positives to focus on as recession fears grip the market, Deutsche Bank says

<ul class="summary-list"><li>Stocks have hit records highs this year as they've entered "Goldilocks zone," Mark Spitznagel says.</li><li>He says investors are overly confident amid immediate positive catalysts like rate cuts and disinflation.</li></ul>"Black Swan" investor Mark Spitznagel thinks that the stock market's streak of record highs is distracting from a more jarring reality that could come by year-end.In a recent <a target="_blank" class="" href="https://www.bloomberg.com/news/videos/2024-09-26/universa-s-spitznagel-says-we-re-in-a-goldilocks-zone-video?sref=LspfQlRv">interview with Bloomberg TV</a>, he said investors are currently enjoying a market that's in a "Goldilocks zone." In his mind, they're focusing too much on positive drivers like disinflation and dropping rates. That's built up overconfidence in the current market.Instead, Spitznagel says they should focus more on catalysts that have a greater lag time, and which could send markets spiraling once they hit. Still, any sort of downturn could take a while longer, he admitted."I think this is going to continue more into sort of pure euphoria before it's over," he said.Spitznagel specifically referenced the recent uninversion of the yield curve, which has historically been a reliable recession indicator."When the yield curve disinverts and then unverts, the clock starts ticking and that's when you enter black swan territory," Spitznagel <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-09-26/stock-market-s-goldilocks-zone-is-in-danger-of-an-abrupt-end">told Bloomberg</a>. "Black swans always lurk, but now we're in their territory."Spitznagel said traders should be more focused on where the market will stand next year as the Fed cuts rates. In his opinion, the Fed was wrong to hike rates so much during the most recent tightening cycle, and that the economy will be forced to deal with those effects eventually."We really need to look back to '22 and what happened there. That was a massive hike, a massive tightening that happened in the economy. Personally, I thought it was an enormous mistake at the time," he said.It's not the first time Spitznagel has raised warning signs on the economy. He has warned of a stock market crash <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-crash-recession-debt-bubble-1929-black-swan-fund-2023-1?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">since January 2023</a>, and back in July, he said the market's yearslong rally has become the <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-bubble-close-to-bursting-mark-spitznagel-black-swan-2024-7">"greatest bubble in human history,"</a> and its bursting would make for a recession.Spitznagel heads Universa Investments, a fund that hedges bets on "Black Swan" events like the 2008 stock-market crash, the 2015 flash crash, and the start of the COVID-19 pandemic in early 2020. When such events occur, Spitznagel capitalizes on the sudden dislocations.

The stock market's euphoria-driven record highs are at risk of a painful downturn, 'Black Swan' investor says

<ul class="summary-list"><li>Starbucks' comparable sales in China are slumping, with a 14% drop in the most recent quarter.</li><li>Its then-CEO put it down to weak consumer spending and a coffee store "price war" in a July investor call.</li></ul><a target="_blank" class="" href="https://www.businessinsider.com/starbucks-traffic-sales-comparable-us-china-visitors-transactions-brian-niccol-2024-8">Starbucks</a> has been struggling in China.Comparable store sales, a key measure for the restaurant industry, were down 14% in its most recent quarter.China, the world's second-biggest country by population, is a crucial market for Starbucks. The coffee giant has <a target="_blank" rel=" nofollow" class="" href="https://s203.q4cdn.com/326826266/files/doc_financials/2024/q3/3Q24-Earnings-Release-Final-7-30-24.pdf">more than 7,300 stores</a> there, nearly 20% of its total footprint — making China its second-biggest market after only the US. It's targeting <a target="_blank" class="" href="https://stories.starbucks.com/asia/stories/2023/starbucks-enhances-innovation-to-support-growth-in-china/">9,000 stores</a> by 2025.Starbucks opened its first store in mainland China in Beijing <a target="_blank" class="" href="https://www.starbucks.com.cn/en/about/history/">in 1999</a>.<a target="_blank" class="" href="https://www.businessinsider.com/starbucks-reserve-roastery-shanghai-china-is-worlds-biggest-2018-4">Shanghai</a> was also chosen as the location of the <a target="_blank" class="" href="https://www.starbucksreserve.com/stories/hello-shanghai">second Starbucks Reserve Roastery</a>, after Seattle.In mid-August, Starbucks named <a target="_blank" class="" href="https://www.businessinsider.com/starbucks-ceo-steps-down-replaced-by-chipotle-chief-2024-8">Chipotle CEO Brian Niccol</a> as its new boss in an abrupt management shake-up. One of his key priorities could be turning around its Chinese business.<h2 id="5529d4ab-9d0b-4d20-9223-34655e83b33d">Sales slump</h2>Starbucks' comparable store sales in China have been incredibly volatile over the past five years.Comparable sales are determined by two components: The number of orders placed and the average order size.In previous years, sales were massively affected by <a target="_blank" rel="" class="" href="https://www.businessinsider.com/china-protests-covid-lockdown-explainer-stakes-2022-11">China's strict zero-COVID policy</a>. But in recent months, they've been hit by cautious consumer spending and increased competition, then-CEO Laxman Narasimhan told investors in July."Unprecedented store expansion and a mass segment price war at the expense of comp and profitability have also caused significant disruptions to the operating environment," he said.Comparable store sales have been negative for the last two quarters. In the most recent quarter, to June 30, both the comparable transaction count and average ticket size were down 7% year-over-year. The average ticket size has been steadily declining over the past two years.In particular, fewer occasional customers have been visiting in the afternoons and evenings, Narasimhan told investors in April.<h2 id="060c4243-77d8-4369-88a7-38a9fadab9f0">Increased competition</h2>The rapid growth of the coffee-shop sector in China means there's simply "too much competition," Sherri He, who leads the China unit of consulting firm Kearney, told Business Insider.She said it was Starbucks' "number one challenge" in China.Narasimhan told investors in April that there was "fierce competition among value players" in China.<a target="_blank" class="" href="https://www.businessinsider.com/luckin-coffee-chinese-chain-making-starbucks-nervous-singapore-2023-11">Luckin Coffee</a>, Starbucks' biggest rival in China, has nearly three times as many stores as Starbucks in the country after monumental unit growth. Luckin was only founded in 2017 but it has <a target="_blank" class="" href="https://investor.lkcoffee.com/news-releases/news-release-details/luckin-coffee-opens-its-landmark-20000th-store-beijing">more than 20,000 coffee shops</a>, the vast majority of which are in China.Luckin has a much broader presence across China than Starbucks, including in smaller cities, the analysts said. Nearly a quarter of Starbucks' Chinese stores are in Beijing and Shanghai, and the vast majority of its other stores are in tier one, new tier one, and tier two cities, according to a Bank of America report from April.Other major competitors in China include Cotti Coffee, McDonald's McCafe, and KFC's KCoffee.<h2 id="7f36829d-72cf-4485-bc9e-7582b527c3ed">Not all Chinese consumers want the Starbucks experience</h2>Coffee is "still a growing habit" in China, Dave Xie, a partner at Oliver Wyman focusing on consumer goods and retail, said. "Lots of consumers just drink tea."And when they do go to a coffee shop, they generally care much more about the product than the experience, Xie said."Starbucks is a consumer-centric company, but for Luckin it's really product-centric," Xie said. Luckin has a "very rapid product innovation cycle" with much more frequent launches than Starbucks, he said.The Chinese coffee chains are much more "agile" at adapting to trends and cater more closely to the flavors favored by Chinese consumers, He, the Kearney partner, said. This includes Luckin's focus on sweet and milky beverages, with a brown sugar boba latte and a hugely popular coconut latte that accounts for 70% of sales at some stores, <a target="_blank" class="" href="https://www.bloomberg.com/news/articles/2024-06-06/china-s-luckin-coffee-lkncy-is-back-and-beating-starbucks-sbux">Bloomberg</a> reported.Xie said that Starbucks' <a target="_blank" class="" href="https://www.businessinsider.com/starbucks-embracing-drive-thrus-and-mobile-over-traditional-mode-2022-8">"third place" model</a> — the idea that it's an alternative space to work and home for people to spend time — had worked in 2017 and 2018, when people were more willing to pay for premium products, but that this was no longer the case. Luckin, in comparison, has smaller-format stores with less seating and a focus on automation and standardization, he said.<div type="image" title="Customers line up at a Luckin coffee shop in Yanbian, Jilin province, China, July 16, 2024. On July 19, 2024," height="3024" width="4031" msid="112739533" hostid="261" sizebytes="406810"></div>Starbucks executives have repeatedly told investors that its premium positioning in China is a crucial part of its strategy. But because of this, Starbucks is limiting its potential customer base.Starbucks is "not targeting the mass but the middle class," in particular white-collar professionals, He said.Starbucks typically charges between 30 and 40 yuan ($4.20 to $5.60) for a 16-ounce drink, including Americanos, flat whites, flavored lattes, teas, and Frappuccinos, according to its <a target="_blank" class="" href="https://www.starbucks.com.cn/en/menu/">website</a>. In contrast, Luckin often has promotions that discount it down to 10 yuan a cup ($1.40), He said."We're not interested in entering the price war," Starbucks China CEO Belinda Wong <a target="_blank" class="" href="https://s203.q4cdn.com/326826266/files/doc_events/2024/01/1/SBUX-Q1-2024-Earnings-Call.pdf">told investors</a> in January. "It is our aim to be the best and lead in the premium market."But <a target="_blank" class="" href="https://www.reuters.com/business/retail-consumer/china-starbucks-tries-avoid-price-war-gets-dragged-into-discounting-2024-05-27/">Reuters</a> reported in May that Starbucks had significantly increased its use of discounting in China to compete with local rivals. Wong <a target="_blank" class="" href="https://s203.q4cdn.com/326826266/files/doc_events/2024/01/1/SBUX-Q1-2024-Earnings-Call.pdf">acknowledged</a> in January that Starbucks' use of promotional offers in China had led to lower average check sizes.<h2 id="b005dbb0-5953-4baa-b378-4adbe7fe5594">Economic growth is slowing, and consumer spending is growing more cautious</h2><a target="_blank" rel="" class="" href="https://www.businessinsider.com/china-economy-second-quarter-gdp-growth-weak-demand-consumption-exports-2024-7">China's economic growth</a> has slowed. It grew just 4.7% year-over-year in the second quarter of 2024, missing forecasts."China's obviously a tough market, and it's not just Starbucks," Brian Yarbrough, a restaurant analyst at Edward Jones, told BI.Luckin's same-store sales were down more than <a target="_blank" rel=" nofollow" class="" href="https://investor.lkcoffee.com/static-files/ec2bafa0-1543-4d62-811d-7115a4349c5c">20%</a> in its two most recent quarters.Consumers are "increasingly rational and pragmatic," Xie said. This makes the price gap between coffee chains an even "bigger challenge" for Starbucks, He said.<div type="image" title="Staff members work at a Starbucks store in downtown Shanghai, east China, Sept. 27, 2022" height="2591" width="3768" msid="112739530" hostid="261" sizebytes="445164"></div><h2 id="d2465509-1a5e-4882-8ccd-74af5a947267">Starbucks remains optimistic</h2>Starbucks executives say the chain is focused on its long-term plan in China.Narasimhan <a target="_blank" class="" href="https://s203.q4cdn.com/326826266/files/doc_events/2024/01/1/SBUX-Q1-2024-Earnings-Call.pdf">said</a> in January that Starbucks was focused on offering more coffee-forward, locally-relevant products in China and opening stores in smaller cities "where we see meaningfully stronger new store economics." He noted that the company was "well on track" to meet its 2025 target of 9,000 stores in China.Starbucks added <a target="_blank" rel=" nofollow" class="" href="https://investor.starbucks.com/news/financial-releases/news-details/2024/Starbucks-Reports-Q3-Fiscal-2024-Results/default.aspx">more than 800</a> new Chinese stores in the year to June 30. The chain has continued to grow in China "in the hope that there's some market shakeout," but in the short term, "it's a pretty tough road that they're going through right now," Andy Barish, an analyst at Jefferies, <a target="_blank" class="" href="https://www.businessinsider.com/starbucks-traffic-sales-comparable-us-china-visitors-transactions-brian-niccol-2024-8">said</a>.

China is Starbucks' 2nd biggest market, but sales are slumping. Here's why.

<ul class="summary-list"><li>Wall Street should still being watching out for a possible recession, said strategist Paul Dietrich.</li><li>He says unemployment is worse than many seem to think at present time.</li></ul>The US is riding high, but one strategist says economic optimism will eventually be cut short as unseen labor weakness bites.That's according to Paul Dietrich, who warned that employment conditions are worse than analysts seem to grasp."Eventually, the US economy will fall into a recession, catching off-guard the Fed, the US administration, and the majority of economists and analysts," Dietrich wrote.In his latest <a target="_blank" href="https://brileyfin.com/capabilities/wealth/individual-client-services/market-insights/paul-dietrich">monthly commentary</a>, the B. Riley Wealth chief investment strategist cited that September's jobless rate would have been 4.5% if temporary government positions were eliminated.That's significantly higher than the 4.1% rate published two weeks ago, a figure that convinced Wall Street that the labor market was doing better than originally feared.Dietrich pointed out this year's significant jump in state and local government employment, adding to the job market's perception of strength.In his view, the rise of these positions came after $500 billion worth of COVID-era stimulus programs were finally delivered to regional governments this year, which rushed to use these funds on new positions before the September 30th fiscal year-end deadline."Unfortunately, almost all of these jobs were listed as temporary jobs, and unless these governments are willing to use their own state and local taxes to keep them hired after September 30th, most of these jobs will be lost over the next few months," Dietrich wrote.That plays into Dietrich's broader point that rising unemployment can be a sure sign of recession. For instance, temporary help services jobs have been trending down year-over-year for the past 18 months — when this occurs for over three months, the US underwent a downturn, he says.Though other analysts have also scrutinized the unemployment rate, its importance has been <a target="_blank" class="" href="https://www.businessinsider.com/sahm-rule-recession-unemployment-federal-reserve-interest-rates-cut-2024-8">questioned in today's unusual economic cycle</a>. As joblessness has ticked up through September, consumer spending remained an unyielding driver of growth.But Dietrich isn't so sure the US consumer can remain as healthy for long.For this, he cited a near-bottom drop in the Consumer Confidence index which fell below consensus expectations in September. Dietrich considers deteriorating confidence as a signal that the consumer sector is shrinking.He argued that the soft landing narrative fueled by a strong consumer base is temporary, and the consequence of pandemic stimulus programs that encouraged consumers to keep spending.Given that spending drives 80% of the economy, contracting consumer activity bodes ill for the current US outlook, he said.

The US risks being caught off-guard by a recession with the labor market far weaker than most realize, strategist says

<keyword id="20207838" type="General" weightage="20" keywordseo="dsp-mutual-fund" source="keywords">DSP Mutual Fund</keyword>'s September 2024 Netra report credits <keyword id="19895063" type="General" weightage="20" keywordseo="india" source="keywords">India</keyword>'s strong economic recovery to increased fiscal expenditure. The report, which tracks current economic trends and market insights through various charts, emphasizes the need for the private corporate sector and households to play a larger role in sustaining the ongoing growth momentum. Netra also pointed out an unsettling calm in the markets, with the Nifty 50 TRI index maintaining an impressive 53-month streak without a 5% decline and 13 years without a drop greater than 10%. Sahil Kapoor, Head of Products and Market Strategist, DSP Mutual Fund, said, "The calm in the markets, marked by an unnerving lack of volatility, is a double-edged sword. While it provides a sense of stability, it also masks underlying risks that could surface unexpectedly, catching investors off guard. To ensure a sustainable recovery, there is a need for the private sector and households to take the lead, transforming fiscal stimulus into lasting economic growth." However, the report notes a shift in market dynamics, with the momentum factor, which has outperformed since the COVID-19 bottom, beginning to lose its dominance. At the same time, the quality factor, which had underperformed over the last four years, is now seeing a resurgence, potentially indicating a change in market leadership that could favour quality-orientated funds, both active and passive. The report highlights the critical role government spending has played in the recovery, with a focus on capital investments crucial for future growth. However, contributions from the private corporate sector and households have lagged. It also draws attention to a slowdown in India's per capita consumption, approaching lows seen in previous cycles. Given that consumption accounts for around 60% of GDP, it is vital that this sector grows at a rate exceeding GDP growth to stimulate private capital expenditure. India's <keyword id="487578" type="General" weightage="20" keywordseo="tax-collections" source="Orion">tax collections</keyword> have demonstrated robust growth, with gross tax revenue showing a five-year compound annual growth rate (CAGR) of 14 %. This growth, largely driven by <keyword id="6354751" type="General" weightage="20" keywordseo="income-tax" source="Orion">income tax</keyword>, indicates a rising dependency on capital gains and stock market performance, introducing new vulnerabilities to the economy. The banking and financial services sector (<keyword id="19910880" type="General" weightage="20" keywordseo="bfsi" source="keywords">BFSI</keyword>) has emerged as a key driver of market earnings, recording a 12 % increase in profit after tax (PAT) growth, significantly outpacing the 4.6 % growth observed in non-BFSI Nifty 50 companies. This disparity underscores the sector's importance in India's economic story and highlights promising investment opportunities.

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