Sunday, 15 March 2015

Stories we should be thinking about

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

Macro matters:

My MUST READ: Yanis Varoufakis the Greek finance minister giving some clear views about QE (link here):

' "QE is all around us and optimism is in the air," Varoufakis told a business audience in Italy. "At the risk to sound the party pooper ... I find it hard to understand how the broadening of the monetary base in our fragmented and fragmenting monetary union will transform itself into a substantial increase in productive investments'

Of course the answer to the above is that QE needs to be aligned with structural reform...which ironically is what Greece is struggling to put together at the moment.

I liked this article about the strong US dollar over time...
...but I think that this chart below is a little more accurate to the reality than the one above:

(h/t @cullenroche, @MarkBrant1KM) 

Next iteration: the Fed get more worried about the US dollar and try to push it down.  They certainly are mentioning it a lot more: 

Been musing recently (link here) about whether the S&P 500 index will move below 2,000 index points sooner rather than later.  Interesting observation on the price:sales ratio and what it means: 

 If bonds are a better future predictor towards future returns then we really should be worrying

Wow, what a differential between 'average' and 'median' net worth in the US: 
This is good on the 'bond star' Dr Michael Hassenstab of Franklin Templeton.  I particularly liked how in his latest newsletter he has dropped all mentions of some of his more recent (but currently poorly performing) investments.  Hmmm.  

As always some fascinating charts in Robert Main's weekly.  I particularly like this one on the Australian dollar. 

In a nutshell why you should listen to conference calls in the quarterly earnings cycle:
'tone surprises in presentations more strongly predict future earnings for firms with a large (positive or negative) earnings surprise'.  I totally agree with this.  

Most interesting on fossil fuels (link here):
'the shale revolution has yet to go global. When it does, oil and gas in tight rock formations will give the world ample supplies of hydrocarbons for decades, if not those who predict the imminent exhaustion of fossil fuels are merely repeating the mistakes of the U.S. presidential commission that opined in 1922 that “already the output of gas has begun to wane. Production of oil cannot long maintain its present rate.'

As only a recent convert to a smartphone (and I still haven't properly connected it to the internet) I was pleased to read that:
'Participants in the study who demonstrated stronger cognitive skills and a greater willingness to think in an analytical way spent less time using their smartphones' search-engine function'.

Company-related observations:

A really interesting Rolls Royce write-up here.  I did buy some stock a few months ago when it was down-and-out and I would agree that it remains an interesting stock.  I certainly learnt something about fuel efficiency reading this piece...

What a graphic on Petrobras:

Interesting on General Electric from Seeking Alpha: 'In one of the biggest deals in the Asia-Pacific region so far this year, a consortium of KKR (NYSE:KKR), Varde Partners and Deutsche Bank (NYSE:DB) has agreed to buy GE (NYSE:GE) Capital's Australian and New Zealand consumer lending arm for about $A8.2B ($6.26B)'.  I continue to like the simplification at GE.  

Finally for this sector two indicators via the Financial Times that the commodity companies are finally selling premium/prime assets?  That is generally a contrarian bullish sign...

'Barrick Gold is eyeing the sale of one of its “crown jewels”, a Chilean copper mine (Zaldivar), as the Canadian miner tries to meet an ambitious debt reduction target to help restore its lustre for investors...of potential interest to a number of private equity vehicles, including Mick Davis’s X2 Resources'

'French oil major Total is auctioning a stake in one of the UK’s most promising natural gasfields, sounding out possible buyers in what could be the first of a wave of deals in the North Sea.
Total is looking to sell a 20 per cent stake in Laggan-Tormore, a deepwater project 125km west of the Shetlands and considered a prime asset in the energy group’s portfolio'.

And finally...

Wonderful on the Zimbabwe here.

'Remember all those worthless Zimbabwe paper banknotes? The Reserve Bank of Zimbabwe (RBZ), Zimbabwe's central bank, is officially buying them back for cancellation. According to its recent monetary policy statement, the RBZ will be demonetizing old banknotes at the "United Nations rate," that is, at a rate of Z$35 quadrillion to US$1... The highest denomination note ever printed by the RBZ is the $100 trillion note. At the RBZ's demonetization rate, one $100 trillion will get you... US$0.003'. 

Have a good week

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