Sunday, 19 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:

This week's MUST READ is this superb article from @smaulgld about China's first upgrading in six years of its gold holdings...which went sharply up but not as much as some observers thought.


However, did the Chinese...mis-state the truth?  8-9k tonnes would put it equal to the US...

Given gold is so out-of-favour at the moment...some fascinating observations.  My view: quality gold-based investments are deeply opportunistic at the moment.  I will be adding this upcoming week...



Talking about China I totally agree with this:

'China needs a functioning stock market that allocates investors’ capital to the most promising enterprises. This means prices that aren’t obedient to the whims of the state, or the party. China may have arrested the stock market’s fall by threatening to arrest sellers. But when it did that, it destroyed the town it was trying to save'.

Still far too many companies not fully trading...


(h/t @PIIE_com)

A quieter weekend (finally!) for all Greece watchers...but something to watch for Monday with this article suggesting not only will Greek banks re-open...but that the deposit withdrawal limit will be increased from Euro60/day to Euro420...will be interesting to watch the impact of this (link here). 

Also got to keep an eye on the Ukraine...more creditors versus debtors / haircut discussions (link here - but a paywall):

Kiev hopes for a 40 per cent debt writedown on bonds worth just over $15bn in order to make the debt sustainable. But a group of four creditors holding around $9bn of Ukrainian bonds, led by US asset manager Franklin Templeton, disagree that a haircut is needed and have put forward an alternative proposal for maturity extensions and coupon reductions.

So the UK has the biggest 'soft power' score globally.  Not sure how much GDP this helps you with...as China would agree:


Bernanke says that Europe will only solve its problems if they get real about economic growth AND imbalances such as trade (link here).  With Germany still up with the leaders on intra EU exports we cannot be surprised...


...salary imbalances are not necessarily a problem if they reflect productivity differentials but that is not always the case.  Using the export data (plus general economic growth data) it is not too difficult to see how countries like Spain or Italy could still be on a slippery slope...


Interesting profile (link here) on the President of the ECB Mario Draghi which concludes with the observation (that I agree with) that:

Mr. Draghi will need to continue striking a balance between the hawks arguing for a hard line and the doves pushing for leniency. Europe should hope he keeps getting it right.


Some fascinating climate and related data at this link here.  Here are a couple of particularly striking charts:




Do you share this view? 'Spam Hits 12-Year Low, Symantec Report Finds'

Kind of interesting tactical observation via 

Next week is 29th week of yr.Going back to '50, it is up just 43% of the time.Only 2 weeks are worse.

Who then follows the above up with this strategic observation on recent AAII data


It is an opportunistic market in my view...I think brave stock pickers are going to be rewarded.  


Company-related observations:

Interesting sector-based analysis on the Trans-Pacific Partnership where talks continue and which is easily forgotten: 

'The ranks of corporate winners will stretch beyond the obvious software giants to producers of “high-tech capital goods,” says Gary Hufbauer, a senior fellow at Peterson. U.S. medical-device makers should doubly benefit, he says: They won’t have to duplicate licensing procedures, and can compete freely for procurement by state-run health systems in other member nations.

The most controversial provision of TPP is a proposed regime for pharmaceutical patents that would help big pharma extend market monopolies longer against generic alternatives. The U.S. is pushing this reform against fierce opposition from other members like Chile (and Doctors Without Borders)'.

A few early Q2 earnings season insights: the strong US dollar being blamed...



...and so a recent preference for more domestically oriented sectors: 



Good write-up on Rolls Royce here.  I recently bought the stock as noted here

Wow, look at the growth of active mobile banking users at JPM:

(h/t @FinTechHK)

A bit of P/E divergence in the large cap US biotech sector...


...how would you value CELG based on the below growth profile?

Should high dividend yield stocks be doing this badly?  Probably not...I like the (sustainably) higher dividend theme for the balance of the year: 




And finally...

Hilarious on conference call: 


Have a good week

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