Sunday, 2 November 2014

Stories we should be thinking about

A few finance and related stories we need to be thinking about before Monday morning:

Macro matters:

Nice article by Hebba Investments called 'What should Gold investors do now?' Link here.  It is interesting that over the last thirty years gold has never posted a fourth consecutive losing year.  So nicely back into the US$1200s by the year end?

Of course gold is not down in all currencies as reminded by this chart:

Certainly sentiment towards commodities is low.  An excellent posting on Seeking Alpha noted that:

'With most asset classes at or near record levels, no one seems to want commodities - oil is at just $80 per barrel, gold just took out a multi-year low, and corn is off more than 50% from its 2012 high. Contrarians may want to take a look, writes Andrew Bary in Barron's, noting commodity markets tend to be self-correcting - lower prices cool production and stimulate demand...Bary also reminds that much of the institutional money which was in love with commodities in 2008 (with oil at $140 per barrel) has exited. The Harvard endowment, for instance, has scaled back its commodity exposure to zero from 8% six years ago...Another sign of the times: Fidelity cut direct commodity exposure in its Freedom target-date mutual funds last year, with the Fidelity Freedom 2030 fund (MUTF:FFFEX) dropping its commodity weighting to 1.2% from 7.5%'.

Still interesting that investors are still buying silver coins despite the nice volatility...

So how is the US consumer looking?  Some wage growth that's true...

...and a falling gasoline price...

...debt service costs have fallen to generational lows...

...even consumer confidence is at multi-year highs:

However I do worry about wealth distribution because, just like a stock market, a lack of real breadth makes any recovery patchy at best.  

Cutting words on the ECB: 'If the total income stream continues to grow at a less than expected (and possibly even a negative) rate then we will have plenty new problems to worry about. This isn’t just the economy responding to the pre 2007 boom. This is the economy responding to fresh problems being introduced by central bank incompetence'. Link here.

And talking about Europe interesting story in The Financial Times: 'Angela Merkel, the German chancellor, is reported to have warned the UK prime minister that she is prepared to consider a British exit from the EU if there is a move to change the rules on freedom of movement' (link here - although a paywall).

More on China's disappointing weekend PMI number tomorrow:

FX and stock market returns do matter as shown nicely in the chart below:

Good article on whether voting should be compulsory here.

'EBITDA may have been used as a valuation tool because no other valuation method could have justified the high takeover prices prevalent at the time'.  Very, very true.  Nice posting on 'ebitda' here (an 'earnings valuation' statistic I do not quote very often).

Got to keep an eye on corporate margins too:

'A significant proportion of North Americans - 40% - have used their smartphones to make payments at merchant locations, up from just 16% two years ago, according to an Accenture survey'.  Interesting write-up here.

Ukraine latest...

'Heavy outflows continue to dog BlackRock’s active equity funds, putting the world’s biggest investment house on course to register a fourth consecutive year of net outflows from this part of its business'. Most certainly makes me think that active management is poised to outperform... (link here - although a paywall).  

Interesting urbanisation insight:

Company-related observations:

Earnings split in the US Q3 numbers pro industrials and technology...but telecoms have been poor.  Generally a high 'beat' proportion BUT remember there is always an earnings season 'beating lowered numbers game' ongoing:

As per a report in The Sunday Times legendary CEO Terry Leahy says that Tesco 'may have seen the worst'

The same newspaper said that 'mining tycoon Mick Davis has...tabled a multibillion pound offer for a big chunk of Anglo American's empire' including copper and nickel assets.

And finally...

Are you loving the Monopoly game at McDonald's?  Then you need to read this post on the chances of winning which includes the following odds:

  • Medium Fries ($1.75) – Odds 1 in 9, or 11.1% chance you win. 
  • Quarter Pounder w/ Cheese ($3.60) – Odds 1 in 44, or 2.3% chance you win. 
  • Small McCafe or Smoothie ($2.40) – Odds 1 in 44, or 2.3% chance you win. 
  • McFlurry ($2.55) – Odds 1 in 44, or 2.3% chance you win. 
  • Breakfast Sandwich ($2.65) — Odds 1 in 22, or 4.6% chance you win

  • Some insights in how people die at work:
    And a knowledge accrual graphic we could all learn from:

     Have a good week

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