Sunday, 26 January 2014

Stories we should be thinking about

Ahead of the new working week, here are a few finance-centred stories before the markets open on Monday, to think about:

Macro matters:

For those who went, how was Davos for you? As my invitation to the World Economic Forum got lost again in the post, my MUST READ is this good summary article on 'what we learned' namely:

'Iran declared itself open for business

Forward guidance is under scrutiny

Davos has become touchier and feelier

Technology - job destroyer?

There's potential for a military clash between China and Japan'
All important geo-political matters absolutely.  I was more struck though that for the third year in a row, income disparity topped the lists of global risks 'in terms of likelihood'.  For once that is proper real world from the mountains of Switzerland:




Of course all that talking at Davos does have some negatives as this chart from The Economist showed:

Outside of Davos it was the worst week for US equities since 2012.  Risk was out, gold was in and emerging market currencies were somewhat volatile:


That really was a big fall in some EM currencies.

Total Federal Reserve bank assets goes through US$4 trillion...


...meanwhile US Treasury sales get more and more focused on domestic purchasers.  Sensible, of course, but it may require higher rates to induce sufficient demand...

 
 ...especially as US median incomes remain under pressure:

 

Put the above three charts together and the threat from less QE to higher Treasury rates to an impact on the economy is clear

One for the gold followers: 'Austria’s mint is running 24 hours a day to meet orders for gold coins, joining counterparts from the U.S. to the U.K. to Australia in reporting accelerating demand boosted by the bear market in bullion'.  Link here.
Got to have a bit of gold

Smartphone boom - as per this link 'Market research firm Gartner predicts 443.5 million mobile phones will be sold in China in 2014, and 90 percent of them will be smartphones'

Smartphones are individually big...but prospectively over the next five years not as big as the 'internet of things' i.e. the point where everything connects to everything

A thought-provoking article about 'a prolonged phase in which regional affairs are dominated by geopolitical competition between the United States and China'

European banks have a combined capital shortfall of about 84 billion euros as per the OECD. Meanwhile,  Christine Lagarde, head of the IMF, warns about dis-inflationary forces in Europe.

Europe, hmmm


 
 
Company-related observations:



Interesting observation from The Financial Times: 'The UK’s largest quoted companies issued more profit warnings in the fourth quarter of last year than in any three-month period since the depths of the financial crisis. Research from professional services group EY shows that FTSE 350 groups warned 31 times that profits would be noticeably lower than expected in the three months to the end of December – the same number as in the fourth quarter of 2008'
Volatile stock picker's market out there
UK supermarkets - The Sunday Times reports that 'Wall St titans plot to break up supermarkets...hedge funds take stakes in Tesco, Sainsbury's and Morrisons with radical plan to hive off property empires'
I see value in Tesco and Morrisons...and glad that the hedge boys maybe see it too.  Let's see what happens...easy to talk etc
BSkyB - more press rumours that the Murdoch family may be interested in having another go at buying the shares they currently do not own. I liked this quote: 'interesting the move makes more strategic sense now than it did in 2010. Power in the media market has shifted away from distributors, such as BSkyB, who are engaged in increasingly intense competition, and towards content rights holders, such as the Premier League and the Hollywood studios'

I would be happy to sell Mr Murdoch my shares at 20%+ above prevailing...

Yahoo - provocative article saying that the company is a dead man walking. 

Vodafone - The Daily Mail runs an article saying that China Mobile is considering a 5-20% stake.  Just over 3 years it was Vodafone selling a stake in China Mobile!  (link here)

Buffett on JPM - I liked some of the quotes in this interview:

'“If I owned J.P. Morgan Chase, he would be running it and he would be making more money than the directors are paying him,” said Mr. Buffett, who has publicly defended the bank executive before and owns J.P. Morgan shares... “If Jamie decides he wants to make more money, all he has to do is call me and I’d hire him at Berkshire,” the billionaire investor added'.
Buffett has a way with words
 
 
HBSC 'imposes restrictions on large cash withdrawals' as per this report

Good god...

 
And finally...

A little joke for those of you who follow economic theory...

 
 
 Have a good week

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