Wednesday, 26 August 2015

Some macro and related thoughts today

Some macro and related thoughts today...

China – the rate cut medicine has not really had any effect today (but anything is possible into the close). And note that historically rate cuts have had a pretty mixed effect as per this chart from @FastFT:

Meanwhile the Xinhua news agency says that ‘global economic growth cannot rely on them (China) alone…calls on Japan and Europe to make more effort to boost world economic growth’and the PBoC Chief Economist said that ‘Foundation Of Economic Recovery Not Solid’ and ‘Financial Market Volatility May Effect Economy’.  I wonder which one influenced the interest rate cut more?!

Talking about the PBOC here is Central Bank Governor Zhou on the front page of one of the Hong Kong papers today: 


(h/t @fion_li)

Still sentiment rose with the China Westpac-MNI Consumer Sentiment (Aug): 116.5 (prev 114.5).  And it is not only consumer sentiment going up as @Callum_Thomas noted: 


So maybe we are just at a sentiment low...certainly feels stock level opportunistic. 

 (h/t @chubailiang)

Market facts – (1) China’s margin debt has plunged by 1 trillion yuan ($156 billion) from its June; (2) S&P 500 sees biggest one-day reversal since October 2008; (3) The S&P 500 hasn't had three consecutive closes at least 4 standard deviations below its 50-DMA since 5/15/40. Happened on Tuesday

Meanwhile, apparently…

(h/t @dee_bosa)

Active management – ‘some 68% of actively managed funds in the UK all companies sector have outperformed the best-performing tracker’ during the last three months (via today’s FT).  Good news.

Greece election/politics latest - Former Greek negotiator Houliàrakis is said to become interim Finance Minister due to his experience w the bailout MoU & the Troika. Greece State Min Flambouraris says Varoufakis will not be included in Syriza ballot lists. "No one is inviting him"

Russia - Gross domestic product in the world’s largest energy exporter will fall 3.3 percent in 2015 before rebounding as much as 2 percent in 2016, Economy Minister Alexei. The ministry had earlier projected a 2.8 percent contraction followed by 2.3 percent growth (link here). 

Emerging markets – on a risk-reward basis China/Greece next to each other and mid-pack! (link here). 

Finally possibly the most important chart – bonds are always more insightful?!  Volatile times await still (but perceive good stock picking / position selection scope)

(h/t @tracyalloway) 

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