Tuesday, 21 July 2015

A few macro and related stories today

A few macro and related stories today...ahead of a busy European/US earnings season Tuesday.

Europe bull run - Eurostoxx futures have rallied for 7 of the last 8 days, adding 11.5%, making it the biggest 8 day gain for 914 sessions (Predicted Markets).  So much for Greece/related fears…but are matters really that good?  To that end 'enjoyed' the below from Fast FT

Greece - Greek government has submitted bill on bailout prior measures, including bank restructuring to parliament.  Votes start later this week.  Chat that full bailout monies forwarded over next couple of months but many hurdles to jump over as reform and related plan implementation details worked out

FX – latest Economist ‘Big Mac Index’ shows that the US$ only cheap against Swiss and Norwegian currencies.  £ a little undervalued, Euro 10%+ undervalued.  Various emerging market currencies up to 40% (China) undervalued

China - 10 yrs since China's currency de-pegged from US$ and +30% since (and judging by the above still fundamentally cheap). 

(h/t @fion_li)

China #2 – However...20% of shares still suspended…

(h/t @Callum_Thomas)

…and striking P/e ratios by sector for the Chinese market!  Best to stock pick, use index shorts in my view. 
(h/t @JoshTANoble)

Latam – falling FX/commodity exports impacting the region despite above Big Mac index fundamentals


Japan – check out the crime demographic…older people.  Is this going to be a trend we see globally with an ageing population?  Great chart via @SoberLook: 

US housing by demographic – striking

Commodities – a little quieter today, gold trading a little over $1100/oz, WTI just above $50/b.  Liked this from @RealPhatDragon.  Still believe we are going to 1%+ of China's FX reserves in gold...and this is why I bought gold-facing assets yesterday. 

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