This ship has sailed

Good morning! Fancy hammering down some beers in this blistering heat? Make the most of it while you can, because a beer shortage is a-comin’. Beer volumes in the country had already fallen 15% year-on-year due to unseasonal rains; now, Mint reports that breweries are anticipating another shortfall of up to 5% this season because of supply chain disruptions. Blame election season. While Arunachal Pradesh has imposed an export ban, states like Telangana have banned triple shifts in factories in keeping with reduced working hours enforced by the Election Commission. The bright side? Gin and vodka consumption is expected to skyrocket as a result of the beer shortage.

🎧 Boeing cannot catch a break. Also in today’s episode: Indian students face internship hurdles in the US. Tune in on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

The Market Signal* 

Stocks & Economy: Chinese President Xi Jinping arrived in France for a European tour during which he will also visit Serbia and Hungary. Xi’s trip begins amid increasing trade tensions with Europe and the US imposing more sanctions on his country. 

Europe and the US believe China is using “industrial overcapacity” and subsidies to flood western markets with cheap EVs and other goods, making local products uncompetitive.  

Yet, Europe doesn’t want ties to be snapped. French President Emmanuel Macron, who had received a red-carpet treatment when he visited Beijing a year ago, has called for a reset in ties with China. European leaders will also call upon Xi to pressure Russia to wind down the Ukraine war. 

Asian markets opened mixed. Japanese markets are closed on Monday. The GIFT Nifty indicates a weak opening for Indian equities.

ECONOMY

Caveat Deflator

In February, the Central Statistics Office (CSO) revised its estimate of India’s GDP growth rate for FY24 to 7.6%. In mid-April, the IMF bumped up its own forecast by 110 points to 7.8%.

Why are we bringing this up now? Because of math. Cue the GDP deflator, which is a calculated number that helps remove the effect of price rise to arrive at the real value added. The CSO estimates the deflator at 1.5%. So, even though nominal GDP at current prices for FY24 is 9.1%, the real GDP, assuming the prices had not changed from the base period, is 7.6%. 

But with where prices of food and fuel are, lived experience on the ground belies the deflator of 1.5%. So what then about the CSO’s GDP estimation?

The answer, which you will find in The Core, may surprise you.

PODCAST

Tune in every Monday to Friday as financial journalist and host Govindraj Ethiraj gives you the most important take on the latest in business and economy.

Today, he asks Ajai Chowdhury, earlier co-founder of HCL Tech and now a member of the India Semiconductor Mission, whether the country can afford to participate in a global semiconductor race.

COMPANIES

Fewer Apples At The Buffett Table

On Saturday, disciples made their way to Omaha, Nebraska, for the annual pilgrimage dubbed the ‘Woodstock for Capitalists’. It was Berkshire Hathaway’s (BH’s) first annual meeting since CEO Warren Buffett’s longtime partner Charlie Munger passed away in November 2023. The conglomerate sold its entire stake in Paramount, fielded the usual questions about post-Buffett succession, and reported a record operating profit of $11.2 billion and cash pile of nearly $190 billion for the first quarter of 2024. Much of the profit came from BH’s insurance operations.

The highlight, however, was BH dumping about 13% of Apple stock.

Buffett asserted that Apple will remain BH’s largest investment. The 93-year-old is bullish about the company and its proclivity for buybacks and dividends. But sceptics reckon Apple’s moat is getting weaker amid regulatory challenges and revenue dip over the last few quarters as device sales lag in its major markets, the US and China.

JOBS

Yankee Clipper For US Internships

Indian students’ painstaking efforts, which includes paying big money to admissions consultants, to get into universities in the US are no longer paying off like they used to. The Economic Times (ET) claims that those enrolled even in prestigious Ivy League schools are struggling to land internships.

What’s to blame?: The job market. The US Department of Labor reported an addition of 175,000 jobs for April, lower than the 315,000 jobs in March. Wage growth in the country is slowing too. Most job gains were in the blue collar sector, social assistance, and healthcare. Jobs in STEM (science, technology, engineering, and mathematics)—which Indian students typically gun for—are hard to come by as the sector either freezes hiring or lays off people. Google’s recent layoffs and Tesla’s cancellation of summer internships are just two examples.

FYI

Bought: Investment firm KKR has pipped the Mankind Pharma-ChrysCapital consortium in acquiring Healthium Medtech for Rs 7,000 crore from Apax Partners.

Tracking heat: The National Centre for Disease Control has launched a digital platform to record heatstroke cases and deaths across 120 hospitals in 21 Indian states.

Catch him if you can: India has sought Interpol help and a blue notice has been issued against absconding JD(S) MP Prajwal Revanna, who has been accused of sexual abuse.

Leaving the building: OpenAI senior executives Diane Yoon and Chris Clark have left the company, The Information reports. Bhavesh Gupta has resigned as the president and COO of Paytm parent One 97 Communications.

Yet another shootout: At least seven people have been injured and four left in critical condition after an unidentified shooter opened fire in Long Beach, California, on Saturday.

THE DAILY DIGIT

1.6 million

The number of people who attended Madonna’s free concert at the Copacabana beach in Rio De Janeiro. (Reuters)

FWIW

Don’t get your FLiRT on: It’s been more than four years since Covid-19 made our lives a living hell. The world is back to its pre-pandemic machinations, but the darn virus isn’t done yet. The Omicron variant is still birthing sub-variants, and two of these, KP.2 and KP 1.1, have been identified as having higher transmission rates. Researchers are also looking into whether the two can evade immunity from prior vaccinations and infections. The good thing is that KP.2 and KP 1.1 symptoms aren’t a major concern just yet. Which is perhaps why epidemiologists could afford to give the sub-variants the nickname “FLiRT”, an acronym derived from the technical names of the mutations: F, L, R, and T.