Wednesday, 10 June 2015

A few macro and related stories today

A few macro and related stories today...

Greece – further Greek-German discussions today with a backdrop of a FT headline saying the Greeks are looking for the creditors to ‘blink first’.  Interesting negotiating stance.  From the same report, a new term to describe what is going on at the moment: 'paperology'...



Greece #2 – it is getting trickier. In other headlines: (1) German Parliament Opposition Against Greek Aid Grows – Bild; (2) EU official says it's already too late to release any more money from current bailout package by June 30

At least the Greek finance minister is travelling economy –


The need for a compromise between creditors and debtors remains...

Bonds - New ‘bond king’ Gundlach says that chances of a Fed rate rise by end year ‘less than 50%’ on weak earnings growth as per this link

As many of you may recall I heard Mr Gundlach speak at the Strategic Investment Conference 2015 last month. Interesting to recall his views back then on slightly broader bond market issues: 

Bonds - Jeffrey Gundlach mused over whether c. 2019 is a big high yield bond storm due to mass rollover then, rising cov-lite positioning and that '100% of the time' high yield underperforms when rates go up.  

On the US dollar Jeffery Gundlach said that 'currency trends usually last 10 years' and that tactically on the DXY ($ trade weight) he was looking for the 93 level to go long/longer. 

Mistakes: Jeffery Gundlach noted mentioned that Australia, South Korea, Sweden and Norway among others erroneously raised rates a few years back only to reduce them substantially more recently.

China - for the country to join MSCI EM index still requires conditions although inclusion likely to be a question of when, not if: "China could be 1/3 of emerging market and Asia-Pacific ex-Japan investors' benchmark in 2 years." Nice South China Morning Post link here.  


Chinese IPOs - China ‘7 debuts today…each and every one up more than 30%’ including CNNPC -a nuclear power operator - biggest domestic IPO in China for 4 years - 44% premium on first day of trading!

A-H premium 7 year high…sentiment not exactly shabby still...


...and in related news: 

Buffett lunch auction - Lunch with Buffett charity auction tops out at US$2.3m and is won by a…Chinese gaming company.  Sign of the times! (link here)


Japan …Kuroda says further weakness in the yen feels overdone and so the yen pushes up. Still fundamentally overvalued given the warped local economy in my view.  Despite the striking fall back to levels last seen in late May...



Generally on exchange rates – most FX undervalued vs the US dollar on FEER (fundamental equilbrium equity rates) analysis discussed here. This can change based on fundamental factors / structural shifts... 

A couple of final charts on demographics...


...and largest companies state-by-state


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