Monday, 30 May 2016

Stories we should be thinking about

Ahead of the new working week here are a few finance and related stories to be thinking about.

Macro matters:

We know that central bank balance sheets have been extended recently especially in Europe and Japan...


...which makes this report interesting: 'Global economic growth prospects are judged here to be the most positive since 2012, based on recent strong narrow money trends…The favourable monetary signal has received tentative confirmation from an upturn in a non-monetary leading indicator derived from the OECD’s country leading indicator indices'



So a time for be being more active than passive then?  The Financial Times is running a story that: 

'According to Morningstar, assets under management in passive mutual funds have grown 230 per cent globally, to $6tn, since 2007. In contrast, assets held in active funds, where stock pickers try to beat the market, have grown 54 per cent, to $24tn'

Of course there is still the Brexit debate and I read that: 

'Nine out of 10 of the country’s top economists working across academia, the City, industry, small businesses and the public sector believe the British economy will be harmed by Brexit, according to the biggest survey of its kind ever conducted' (link here)

It is still expensive to hedge the Pound...too expensive given the status of the polls?


Maybe in Europe we should be more worried about a pick-up in inflation.  Note yet a problem in Germany but other countries may find it harder to absorb...
 

...or maybe we should worry about bonds being too expensive at a time of high debt levels...just as we have seen in Puerto Rico:  

Sector and companies: 

The aggregate net debt of the 15 largest North American and European oil groups rose to $383bn at the end of March, up $97bn from 12 months ago, according to company reports compiled by Bloomberg. Got to stock pick carefully in the energy space: 



Interesting on Apple: according to Google Trends, people are more interested in the older iPhone 6 from 2014 than the iPhone 6s that was released in 2015 (link here)



The reason I like the stock though is that whilst sentiment is low...they still have substantial emerging market opportunities as noted here: 


I liked this on how low capital employed businesses had performed better...but made me think that everyone who focuses on high return on capital businesses may not get the sustained high returns they hope for...




And finally...

Crikey...


Have a good week 

Monday, 23 May 2016

"Ryanair’s comments tell me to buy EasyJet"

I wrote a piece titled "Ryanair’s comments tell me to buy EasyJet" which was uploaded just now to the ShareProphets website.  You can find a link to the piece (free sign-up) here.




Sunday, 22 May 2016

Stories we should be thinking about

Ahead of the new working week here are a few finance and related stories to be thinking about.

Macro matters:

Of course the G7 finance minister meeting did not come up with anything hugely definitive...

...but there was the sign of a little spat as (according to Seeking Alpha):

'Treasury Secretary Jack Lew said he did not consider recent yen moves as "disorderly," but his Japanese counterpart Taro Aso dubbed them "one-sided and speculative." G7 leaders also called for a mix of monetary, fiscal and structural policies to boost demand but left it to each country to decide its own policy priorities'.

Of course whilst it is tempting to conclude that no government in Spain year-to-date is good for growth the reality is that easy comparisons have had the most influence
(and also note the absolute level of growth - hardly any country above that 'trend' level of 2.2%...

In Europe a very close Austrian Presidential election is ongoing...


...final results tomorrow between the far right and the green candidate for the largely ceremonial role...but one which again indicates voter malaise across Europe. 

Of course the biggest test in Europe of this is likely to be the UK EU referendum on 23 June.  Here's the ballot paper: 
As for referendums did you see this chart? More referendums...lower turnout: 

Meanwhile in interesting discussions/data around the EU referendum vote I note these two stories which are being run on the Financial Times website: 

'The Vote Leave campaign has published campaign posters that say “Turkey (population 76m) is joining the EU”, alongside a picture of a British passport, suggesting a new wave of migration.

Britain has long supported Turkish accession to the EU, but Mr Cameron told the ITV on Sunday that it would be “literally decades before this even had a prospect of happening”'

'Just 9 per cent of people buying “prime” central London houses and apartments in the first quarter of this year came from other EU countries, compared with 29 per cent a year earlier and a five-year average of 20 per cent. This is despite a 10 per cent fall in sterling against the euro that has made UK homes significantly cheaper for European buyers'

Nice chart via @Callum_Thomas showing that the biggest historic impact on bond yields via QE was anticipation and not reality.  So what happens with rate rises?

I liked this via @bespoke_invest on how absolute return funds are anything but...


 Maybe they should have chosen more value strategies...



Meanwhile in the US Presidential election run-up an interesting update: 


 Rise of the robots: 60,000 workers culled from just one factory as China’s struggling electronics hub turns to artificial intelligence (link here).  A worry?  Not really...just change and this is what you want in a dynamic economy. 

Talking about change, a nice indication of advertising market change: 


Wonderful demographic indicator: 


(h/t @GCGodfrey) 


Sector and companies: 

Interesting story from the Saturday FT.  I still don't know why the US authorities give such monies a 5% tax rate and an equivalent figure for training...

Talking about tech stocks hedge funds 'hate Apple ... but love Facebook' (link here)

I see Gazprom is set to have its first negative free cash flow year for a decade: 


(h/t @jfarchy)

Bank valuations have compressed recently...and only in Australia are they still above book...

...well there are indications that historic lessons may not have been fully learnt...


(h/t @cablecarcapital)


And finally...

What it's like to be part of the 'rare breed' of people still using Google Glass (link here)...

...and what a list of stock market cliches! 


(h/t @davidmoadel)

Have a good week - and don't forget to check out the last week on Financial Orbit here

The last week on Financial Orbit

It was the typical busy week here at Financial Orbit.

Two videos covering my various exploits at the UK Investor Show a few weeks ago can be found here (value investing panel) and here ("balloon debate" victory).  Great fun to participate in this investor gathering for the third successive year.

I also had two contributions on the Proactive Investors website over the last week.  The first of these ('Financial Orbit analyst sees opportunities for “savvy investors” this year') was actually recorded at the UK Investor Show and can be viewed here...


...the second contribution were some thoughts on the UK retail sector which can be viewed here:


Finally on the Share Prophets website I wrote up some thoughts on Thomas Cook after their update shocker on Thursday under the title "Turkey spotting at Thomas Cook".  You can read the piece in full here.  


Turning to my content publications, this weeks Financial Orbit Macro publications included a 'sentiment special' which I believe covered some fascinating ground.  I observed that...apparently the biggest tail risk globally is Brexit.  That feels…like an over concern to me and frankly I would rate slower Chinese growth and stimulus policy impotence more highly…


Also, the UK and the Pound is more dis-liked than even commodity facing stocks. So no Brexit hello Pound strength (well the Bank of England said so much last week) as well as UK equity relative strength. 

So what stocks should you buy then?  Well the undervalued and underweight quadrant is always opportunistic…and look at the commodity-facing, industrial and financial sector exposures apparent there.  These areas should be given a decent weight.  



Financial Orbit Stocks discussed some of these opportunities from a 'preferred list' perspective.  This week I looked at results from Wal-Mart, Thomas Cook, Richemont and John Deere...and added to at least of these names. 

I kept on musing about the Financial Orbit Immediate 'best of' list too although did not add any new names to the sixteen strong list. Look out for some addition names on Monday however based on levels over the last week.  

As always if you want a two week trial of any or all of my content publications please just sent me an email. 

Chris Bailey
Founder, Financial Orbit Limited

Email: chris.bailey@financialorbit.com
Twitter: @financial_orbit 

Friday, 20 May 2016

"Mothercare recaptures past glories – Financial Orbit’s Bailey"

I gave an interview to Proactive Investors about the UK retail space yesterday.  You can listen to the whole interview here



Chris Bailey, founder of market analysis company Financial Orbit, tells Proactive Investors that Mothercare plc (LON:MTC) had “recaptured past glories” by returning to first principles after losing its way.

On the day the baby goods chain reported its first profit in five years, UK retail sales data from the Office for National Statistics revealed sales volumes rose strongly in April with sales 1.3% higher in the month compared with March.


In terms of that data, Bailey said “people are buying more, but spending less” as the UK population mulls the uncertainties surrounding the upcoming EU referendum vote on June 23rd.

Thursday, 19 May 2016

"Turkey spotting at Thomas Cook"

I wrote a piece titled "Turkey spotting at Thomas Cook" which was uploaded just now to the ShareProphets website.  You can find a link to the piece (free sign-up) here.

Tuesday, 17 May 2016

Financial Orbit analyst sees opportunities for “savvy investors” this year

I was lucky enough to be interviewed by my friend (and fellow Share Radio presenter) Sarah Lowther of Proactive Investors at the UK Investor Show right at the end of last month.  You can watch the short sub six minute video here.


Chris Bailey, founder of market analysis company Financial Orbit, tells Proactive Investors he sees opportunities investors “for the balance of this year” despite tough macroeconomic conditions.
The first six weeks saw markets “fall off a cliff” he says, but adds that “savvy investors” have taken advantage of this, with some big returns in the second half of the first quarter.
Bailey adds that the main drivers for the year will be the impending BREXIT vote, whether the commodity prices can continue to rebound, and the outcome of the US general election.