Friday, 29 May 2015

A few macro and related stories today

Greece – Lagarde of the IMF notes a ‘Greek exit is a possibility’, meanwhile EU's Moscovici said ‘Grexit not in EC's plans, real progress has been made with serious talks’ whilst other stories centre on ‘EZ take Hard Line, Tell Greece No Fresh Cash Possible In June Unless Outline Of Overall Deal Ready By June 5’(Rtrs Citing Sources). Also, German CSU lawmaker Michelback said ‘German parliament should vote on Greek aid’ (Bild) 

In short: still a complete mess and the clock is ticking…

European earnings – new Stoxx600 numbers out overnight. 8.6% now expected for FY15 an improvement on the mid 7%+ number last week.  And the reason?  Sharp increase in financials sector hopes, energy +ve momentum too.  Get stock picking...

The US equivalent data will be out later which should again show 1%+ only growth in S&P 500 earnings expected in FY15...also there is US GDP to watch out for.  

China – highly volatile today, currently up but earlier noteworthy that ‘from yesterday's high to today's low, the Shanghai Composite lost 11.1%. That's the largest 2-day high-low decline since Jan 22, 2008’ (h/t @David_Scutt).  Meanwhile as Fast FT notes - 'just in time for an historic sell-off - foreign investors rushed into China's equity market at a record pace in the week ended Wednesday, May 27 as preliminary data from EPFR shows China equity funds absorbed $4bn from foreign investors in the week — double the previous record'.

US market split/breadth -
Financial and healthcare stocks have led the advance on the benchmark S&P 500 over the past three. However, six of the ten major sectors have fallen. Only 124 stocks on the New York Stock Exchange hit new 52-week highs in the past week, characterised by UBS research as "a very weak number"


If you mate that with poor absolute earnings growth...not good.  

Japan – mixed but very poor consumption data a standout.  In my opinion forget the zero inflation rate or low 3.3% unemployment rate, this is the really important data point.  Countries that don't have domestic consumption don't tend to grow...even if the yen decline means the local stock market is up for the 11th successive day in a row. 





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