Sunday, 22 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 is this piece with the dry title of 'Using Total Return EPS to Decompose Historical S&P 500 Performance: Charts from 1871 to 2015' but some mind-blowing conclusions: 

'At present, nearly 100% of current S&P 500 EPS is being used to fund dividends and buybacks–a trend that looks set to continue.  Going forward, interim valuations–which will influence the returns that those dividends and buybacks produce–are therefore likely to be even more impactful than they were in the past.  If valuations remain where they currently are–at levels that would qualify as historically expensive even on the uncertain assumption that profitability will remain at record highs–future returns are likely to suffer accordingly'.

(h/t @MarkBrant1KM)

Of course the bounce back ability of the S&P 500 has been remarkable...

...but look what tends to happen over the couple of months following (like last week) a big bump up following a FOMC meeting: 

(h/t @ukarlewitz) 

Meanwhile the move of the US dollar was notable for its material nature versus history:

(h/t @David_Stendahl) 

Of course weakness in the US dollar is typically associated with stronger commodity prices...and they certainly are out-of-favour at the moment as this chart shows: 

(sourced from here)

You can make money in commodities though over the medium/ this chart on gold and silver shows: 

Wow, did you see the average debt numbers for US students?

I wonder if wages will be so correlated with spending in the future...paying down debts become more important:

'As China navigates the “new normal” to become the world’s largest economy, the IMF stands ready to help. I look forward to a fruitful discussion'. Not sure if this is an offer they will want to take up!  Link here.

Low fees benefits (link here)

Russia's ambassador to Denmark warned Saturday that Danish warships could become targets for Russian nuclear missiles if the country joins a U.S.-led NATO missile defense shield expansion. Link here.

Meanwhile Russian reserves continue to fall...which tells you that the pressure on something happening is quite high.

The headline is ‘The German Supremacy: How Europeans see (the) Germans’. Provocative cover...and a good article on German-Greek WW2 reparations here.

India and China are unwilling to live in perpetuity without changes to the Western-built architecture that prevailed a decade ago (link here).  

A great set of thought-provoking index (technical) charts here.  I particularly liked this one...but all were fascinating.

Company-related observations:

Spot the lack of sector value...

...interesting impact on the earnings profile of the Dow Jones Industrial Average from introducing Apple instead of AT&T...

Talking about Apple here is a great link on the Apple Watch here which tries to put it into its full potential context:

'with its $650 cellphones and $1,500 computers, already makes perhaps the fifth or sixth most expensive item in a high-income household, right behind furniture, luxury goods, TV’s, cars, and homes. And guess what? They’re now in the luxury goods business. There are rumors that they’ve been trying to make a TV for some time. Reports suggest they are investing heavily in making a car. These are high-ticket items, and that’s why the most important thing the Apple Watch might do for Apple is get us used to the idea that Apple makes goods worth spending many thousands of dollars on'.  

Totally agree with the direction of this update from Trefis on Twitter:
'The rapid rise in Twitter’s monetization was the key factor responsible for this updated valuation. It has been fueled by an increase in ad load levels, surge in the user base, the  roll-out of better and more targeted ads that derive higher pricing, as well as the monetization opportunity from the passive user base'

And finally...

10 great tips on speeches (link here).  I particularly liked:

'Never speak before the main course in a dinner speech:
Don’t get between people and their food. (The same principle applies to dogs.) '
 Browser hacking... (link here)

4 bugs were demonstrated in Internet Explorer (tested on Windows 8.1)
3 bugs were demonstrated in Mozilla Firefox (tested on Windows 8.1) 
2 bugs were demonstrated in Safari (tested on OS X Yosemite) 
1 bug was demonstrated in Chrome (tested on Windows 8.1) 
Meanwhile, researchers also demo’d exploits across Adobe Reader, Flash, and Windows itself.

Have a good week

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