Sunday, 5 July 2015

Stories we should be thinking about

A few finance and related stories we need to be thinking about before Monday morning:


Macro matters:

Well WHAT A SUNDAY with the Greek referendum.  The polls have closed as I write BUT no results yet other than an expectation that it will be close (and the early polls suggest a 'no'):

So many issues around the Greece debate which may be easier to answer once the result is known.  The weekend started off on a troubled note with some stories about a 'bail-in'...


...but there is no doubt that it is going to be a difficult transitional period whatever happens, now that the country has missed some payments to the IMF. 

(h/t @NickTimiraos)

It has certainly impacted the Greek economy and banks.  I personally still remain cautious that without further support the Greek banks are going to struggle to open Monday/Tuesday: 

(h/t @VisualCap)

Still at least Greece has started to reform a little as per this latest survey from the World Bank:
So it is going to be an interesting evening.  Is Mrs Merkel presiding over a crumbling regional economy ('Women of the ruins') as suggested by a leading German media publication?


Meanwhile the big structural issue is around an increasingly difficult backdrop for creditors.  I liked this piece comparing Greece and Puerto Rico (link here).  

'Greece should reinforce the lesson: Sovereign debt is a prime source of "systemic" danger. That is especially true of small governments in a currency union. A government is just a highly leveraged financial institution and insurance company'. 

Of course the other big macro story - arguably even more important from a global perspective - is the current volatility in the Chinese stock market.  Various stories over the weekend about further stimulus and support measures but in terms of the mentality of the local populace and the stock market I thought this was interesting: 

'A random survey of 300 university students made by the state-run China Youth Daily in April found that 33% of respondents invested in stocks. Of them, judging from the replies, 47% know how to read candlestick charts, 20% understand stock-market terminology (bull position, long sale, and so on), and more than 60% choose stocks following government policies'. Link here.  

As for the wider Chinese economy the impact of the current growth slowdown is shown nicely here: 

As for broader markets fascinating to see the lower returns / higher valuation combination in many markets today compared to a few years ago (2011): 


(h/t @Eurofaultlines)

The above makes this really interesting - on a weekend without much other macro this paper (and key graphics below) on fiscal reform would be the top MUST READ story (link here). 


Fascinating financial ranking here

'Financial Secrecy Index to show which countries are doing the most harm. The result is a completely different list than the Basel Anti–Money Laundering Index (BAMLI) or Transparency International’s Corruption Perceptions Index (CPI)'


15 problems with paper portfolios versus real world ones...(link here).  So very true...and this is why my own portfolios mentioned on these pages are 100% real...

Company-related observations:

'Potash Corp. could approach K+S' shareholders directly and submit a hostile takeover bid, which would spice things up a little' (link here).  Totally agree with that...and I said it earlier in the week here

Interesting Glaxo posting here musing about the prospects for the global pharmaceutical company (link here).

Uber's epic rise:

UK energy stocks - interesting comment in The Sunday Times that the long-awaited competition ruling will conclude that there is no need to break up the biggest power companies and 'instead bash regulator Ofgem for holding back competition in the energy market'.

Finally interesting that Monsanto are even considering ditching its 'century old brand to secure a deal' with Syngenta.  They are getting desperate as I noted a couple of weeks ago (link here).

And finally...

The secret of fulfillment is, “to choose trouble for oneself in the direction of what one would like to become.”  This is so true (link here). 

Who knew the price of beer varied so much: 



Have a good week

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