Sunday, 23 August 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 it has been a rough tough week as this great graphic via Bespoke Invest shows:

Interesting that despite all of this Barron's runs with a different type of front cover.  

So much to think about in terms of investor sentiment and macroeconomic challenges as I discussed in Friday evening's Financial Orbit Speaks (link here).  A few extra thoughts on the currently pertinent issues.  First this was good via @Callum_Thomas showing the really negative sentiment towards commodities: 

Oil has been of course in the vanguard of this commodity uncertainty despite demand going up: 

Got to really add in supply though as noted in this report

Still feels to me as if the main opportunity in the commodity areas are centred around stock picking rather than commodity longs per se. 

Turning to the emerging markets and i read that: 

'China's cabinet approves and publishes new rules for domestic pension funds to allow them invest up to 30% of all assets in stocks' (via @george_chen)

Well China has been struggling with the oft-quoted growth slowdown but also capital outflows...

...and money supply measures are actually - thanks to the policy loosening that is ongoing - getting stronger (link here):

Nevertheless with global trade falling it is not an easy backdrop still and certainly feeds into general market volatility:

Turning to Greece I read this interview with ex finance minister Varoufakis (link here) is worth a read if only for this quote: 

“The social inefficiency of capitalism is going to clash at some point with the technological innovations capitalism engender" 

A striking report for anyone interested in the agricultural markets: 'As of this week, the average of the group of forecast models used to predict the intensity of El Niño are  calling for an event that would surpass the record-strong El Niño of 1997-1998...El Nino, which is a measure of how abnormally warm the tropical Pacific Ocean is, can be classified as “very strong” if surface waters are running at least 2 degrees Celsius warmer than average for at least three months in a row. While this can be a difficult metric to achieve — it’s only happened twice before — it’s looking more like this year will not only jump that hurdle, but also surpass the old record'

Talking about bad weather this report noted a useful insight: 

Company-related observations:

Noteworthy lack of revenue growth in the S&P 500 ex energy markets: 

Good report here on Amazon...

'...if you use that $10 billion Ebit figure, you don’t have to use more than a high-teens multiple to get a value for AWS in a couple of years that accounts for more than half of the value of Amazon today. And remember, as recently as six or seven months ago, people were ascribing no value whatsoever to that business'

and Boeing:

'Relative to other areas of the industrial economy, demand for commercial aerospace is very, very strong. Boeing’s commercial-aerospace backlog would take 7 1/2 years to work through under a normal production schedule, even if they never took another order, assuming no cancellations'

Also this was good on Facebook...

'The CEO has the maniacal drive that is required to get a company that has a market value of $255 billion to two or three times that'

...and Apple:

'It’s not a growth company anymore; it could be a good value stock'

Meanwhile from The Sunday Times:

'GKN mulls £780m off-road unit sale...FTSE 100 engineer could offload mining and farming arm after aerospace growth'

And finally...


Have a good week

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