Wednesday, 25 March 2015

A few macro thoughts today

Travelling so just time for some quick content today...

Europe / inflation – “The “inflation expectations” gauge watched most closely by the European Central Bank has barely risen since the eurozone’s monetary guardian started its €60bn a month purchases of public and private assets on March 9. However, the measure of inflation rates expected over five years starting in five years’ time has risen since the lows seen at the start of the year”(FT)

More QE required...

Greece – hopes to have its reform proposals out in about a week.  Most observers think the country will run out of money in less than a month. 

More structural reform required (and a debt haircut)

Ukraine - The likelihood of a default by Ukraine on its debts is now "virtually 100 per cent", Moody's says. Analysts with the rating agency downgraded Ukraine's government debt rating to 'Ca3' from 'Caa3' on Tuesday

Another 'European' country that requires a debt haircut...

China – potentially breaking a 10-session upward streak - the longest in 23 years, according to Bloomberg data - that had placed the index at its highest since May 2008.  Even the hope of more stimulus has its limitations!

Couple of scary looking charts via Fitch on the Chinese banking sector thanks to this excellent Fast FT article: 


Gold – up for 5 trading days...go gold!  Still a favoured asset allocation area for me...

Oil - Against expectations of a 4.75 million barrel build (according to Bloomberg), API reported a 4.8 mm barrel build overall but the Cushing build (2mm barrels) was less than last week's 3mm build. This is the 11th weekly build in a row - the longest streak of builds since October 2004. The last 11 weeks have seen inventories build over 20% - the fastest pace on record.  

Oil is still tricky...but I see stock-level opportunities. 

Brazil – Gives up on ‘currency war’ or objectives realised? BRAZIL CENTRAL BANK TO END ITS #FX INTERVENTION PROGRAM ON MARCH 31ST $BRL

Brazilian real chart looks horrible...(USD going massively up)

Japan –  via this articleThe central bank's portfolio has a book value of around 5.7 trillion yen. But soaring share prices have lifted its market value past the 10 trillion yen mark -- nearly 2% of the tally for all Tokyo Stock Exchange shares. The figure makes the BOJ second only to the Government Pension Investment Fund, whose portfolio boasted a market value of 27 trillion yen as of December's end” 

Hmm...still cautious about Japan

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