Friday, 27 March 2015

A few macro thoughts today

A few macro and related thoughts this morning.  

General valuation - 1/4 Of All MSCI World Stocks Are Trading Above 30x PE and 4x BV.  A MUST READ link today. 

UK election debate – most polls have David Cameron winning over Ed Miliband relatively narrowly

Meanwhile in UK tax news…here is a greater certainty whoever wins in May: 

France vs Italy – not what you would expect to see.  These are the two critical economies to watch in Europe however.  

Swiss reserve build-up as per SNB numbers released…now you can see why left the euro peg

Oil – a potentially biased view? “Iraq Oil Minister Abdul-Mehdi: Oil will trade at $70/bbl by end of '15 & avg Iraqi exports to rise 100K bpd to 3mln bpd in March”.  I know oil has risen a lot in the past few days but that seems a bit too optimistic...

Japan – ex the tax rise impact core Japanese inflation fell to 0% and household consumption declined for an 11th straight month.  More stimulus please…especially as:

USD/JPY has fallen for 5 days in a row, dropping 1.6%. Run has apparently only extended to 6 days once in the 175 weeks since 14th November 2011 (via predicted markets) 

(chart via Fast FT)

China/pollution -  as per this Bloomberg piece, China’s government is targeting a PM2.5 level of 35 micrograms per cubic meter. In 2014, the level was about 60. Our estimate suggests that without any changes in industrial structure or other abatement efforts, getting there would require a reduction in industrial output of as much as 20 percent.  There's a thought to concentrate the mind...and encourage the anti-pollution industry in the country. 

Finally, a great chart and write-up from @linzcom on the ludicrous nature of the Australian property market which touches on themes applicable to many other property markets around the world...which remain a big worry/overhang for me...

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