Wednesday, 18 March 2015

Charts and macro thoughts today

Am travelling just time for a few headlines and key charts.  

Greece – series of troubling headlines e.g. ‘capital controls could prevent a Greek euro exit’ which the Greek govt replied to as a ‘fantasy scenario’ and ‘Greece won’t be blackmailed’. No wonder Merkel said to view talks with Greece as ‘difficult’.  Many more troubled headlines to come before any ultimate deal...which I still believe will be a bond haircut (or face up to Grexit risks). 

Still European economic surprise differential with the US still marked...but in my view more than factored into share prices currently: 

FX benefits – Moody’s study (highlighted by Fast FT) shows who should benefit the most from a weak euro: Ireland, Germany and…Italy.  Greece amongst the smallest beneficiaries.  Feels about right given relative export focus and competitiveness: 

Commodities - Iron ore fell 3.3 per cent to below $57 a tonne, a fresh six-year low. WTI crude now at a 20% decline from this year's peak as oil inventories increased by 4.5m barrels in the week ended March 6, to 448.9m barrels — highest level at this time of the year for the past 80 years — according to the EIA.  Commodities still v out of favour...which is why I like to look at them for opportunities of course.   

As a good mixer with yesterday's copper charts I showed in the Wrap, I thought this was interesting on longer-term commodity demand in China/key emerging markets:

Talking about China - Property prices in China fell at a record pace in February at -5.8 per cent year-on-year last month.  Prices fell in 69 of the 70 cities tracked. In Beijing they fell 3.6 per cent year-on-year, versus a 3.2 per cent in January. In Shanghai prices slipped 4.7 per cent, from 4.2 per cent in January. Time for stimulus?!  Certainly there is a risk consumer spending may be impacted as per this excellent chart below: 

(h/t @TomOrlik)

Ukraine - Ukrainian FinMin Jaresko: USD 40 Bln Is Enough Aid To Stabilize Ukraine Economy, Would Need More Aid Even In State Of Peace.  Still sounds like bond haircut territory to me.

FX changes YTD – still don't think we are in a currency war zone?!  Now to await the inevitable volatility spill-over...

(h/t @sobata416)

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