Tuesday, 26 May 2015

A few macro and related thoughts today

A few macro and related thoughts today...

Greece – the latest Varoufakis media output is here:‘Austerity is the only dealbreaker’. Essentially if the creditors don’t impose austerity then Greece will strike a deal.  The discussions roll on…  Good chart however from the report:

Greece #2 – but will they pay in June somehow?  On CNN Varoufakis said "We'll make the payment, because I have no doubt we will have an agreement by then"  Also, Greece's ruling Syriza party narrowly rejected a call to stop paying IMF debt & nationalize banks, voted 95-75 with one blank vote. 

However...note the euro fall continuing as yesterday's Spanish local election result plus the above Greek discussions collectively weighed.  Euro back down to the low 1.09s against the US dollar...another fall to the 1.05 level and those global imbalance fears are going to be high. 

Remember that global bond volatility versus global equity market volatility chart I showed on yesterday's Stories we should be thinking about?

China - SHCOMP HEADING FOR ITS BIGGEST 6-DAY RALLY SINCE NOVEMBER 2008.......up 19% from May 8th!!!! (h/t @RANSquawk)  Shenzhen market doubled in 5 months and McLaren say supercar demand best ever (link here). 

And yet...they may well be still misrepresenting the truth over GDP growth as per this excellent graphic on the front page of the Financial Times today: 

Still rampant markets have been great for hedge fund investors in the area...

Away from China, some noteworthy emerging market growth problemsNigeria: ‘amid a nationwide fuel crisis, the biggest mobile provider, MTN, said its phone network would be “significantly degraded” if it didn’t get fresh supplies before today. The shortage in Africa’s biggest economy is affecting everything from radio stations to airlines’ (qz.com).  Meanwhile Brazil warned of a coming crunch. The government said GDP would drop 1.2% this year, or 23% in dollar terms because of a weakening real, its worst contraction in 25 years.

Finally an interesting graphic which I will be doing some more thinking about: 

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