Thursday, 16 July 2015

Financial Orbit wrap 15/07/15

Five sentences or graphics which sum up the Financial Orbit output over the last 24 hours across the website, twitter account and anything else thought about...

A bit late distributing this today due to being generally pretty busy...and earnings season has only just started!!  So a few quick summary thoughts from the last 24 hours or so:

1. Greece voted yes on the below...

...but the IMF throws in a curve-ball however ‘Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far’ (link here). Feels correct to me and is reflective of underlying tensions. 

Now the question is whether this spills over into a more overt economic schism between Europe and the US (IMF) this space. 

2. China - China's economy grew 7 per cent in the 12 months to June 30, in line with the year-on-year pace at the end of March, but above economists' forecasts for 6.8 per cent. 

However stronger-than-expected growth in the June quarter is due to a surge in brokerage activity, which was rising as the equity market reached a peak in early June. This feeds directly into the service sector component of GDP.  

Hmm...this last comment has played out in the a weaker Q3 and hence further loosening?
(h/t @RealPhatDragon)

From an underlying economic perspective I thought this graph from Wednesday's Financial Times potentially gives a better view of growth reality...

3. Fascinating insights from the Swedish capital goods bellweather stock SKF yesterday I thought (which you can read in full here). 

4. IMF on "constrained by the still weak international environment and fast approaching adverse demographic developments". Hmm!

5. Otherwise busy with the earnings season.  

Listened to conf call. Conclusion: despite firm-ish valuation, quality branded biz, buy initial position <16 then each new £1 down

Thoughts on Yum! Brands, Mead Johnson and various others to follow...

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