Sunday, 9 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:

Going to be a busy week in Greece as noted here (stop press: now talk of substantial agreement, although not all believe it will be successful - link here). 

'Greek government officials discussed a draft of the country's third bailout agreement drawn up on the basis of discussions with EU/IMF lenders, a government official said on Saturday, boosting hopes a deal could be wrapped up in days.  Athens is racing to wrap up the bailout agreement of as much as 86 billion euros by as early as Tuesday in a bid to get the first disbursement of aid by August 20, when it faces a debt payment to the European Central Bank'

Meanwhile Portugal have been cautioned by the IMF about their debt sustainability (link here - paywall).  Very akin to the Friday story I linked to here with this worrying chart:

I liked this from Pimco on UK interest rates:

'the market assumption of a February 2016 hike seems to us the very earliest policy could be tightened. By the BOE’s own admission, CPI will still likely be below 1% in February, a level that would require the governor to write a letter explaining why inflation has undershot. To decide to raise interest rates while writing that letter would seem a little incongruous'

Good observation via @Eurofaultlines:

The 1 year real lending rate adjusted for PPI in China is ~10%, a big hurdle given the high NFC debt load and high capex intensity

The weekend's Chinese export numbers were not so great too. Makes you wonder if the yuan is too strong (I used a not dis-similar argument in this week's Financial Orbit Speaks re the global problems of the strong US dollar regime - see here)...

...or that the focus of the Chinese economy needs to change: 

Commodities have been big underperformers but the Barrons front cover page highlights potential opportunities (I would agree with)...

...meanwhile this article highlights that historically this commodity cycle is light in duration

Want to be bearish?  Read this then which observes:

'Wages and salaries are barely keeping up with inflation, real household incomes are down 8.5% since 2000 and state and local government taxes and spending are rising at twice the rate of inflation'

Amazing change in TV watching especially by the younger age groups...

'Iran’s economy is larger than Australia’s and twice as large the UAE'.  Interesting to remember this when reading this report titled 'Europe must wake up before Iran falls into the arms of Russia and China'

5 obstacles/facts about the current Trans Pacific Partnership agreement which is struggling to be signed.  Link here

I liked this on electric cars in the US which observed:

'The benefit is large and positive in many places in the west because the western electricity grid is relatively clean – primarily a mix of hydro, nuclear, and natural gas...The benefit is large and negative in many places in the east because the eastern electricity grid primarily relies more heavily on coal and natural gas'

Talking about new technology, this was really great on self driving cars...and how they can drive new business, change our work/life patterns and spark debates.

Company-related observations:

Interesting stories in the weekend press about potentially more RBS shares up for sale this year and Tesco moving closer to selling some of its Asian units (to help augment its debt position).

(h/t @fletcherr)

Interesting and surprising: 'The percentage of eligible users who use Apple Pay dropped from Q1 to Q2 of this year, according to a new installment of the and InfoScout Apple Pay Adoption Tracker ' (link here)

I enjoyed reading this report by @UKValueInvestor on Royal & Sun Alliance titled 'How to escape a value trap by waiting for an acquisition bid'.  Funnily enough I also sold my RSA shares this week (at a profit).

The Wall Street Journal reported on Saturday, Berkshire is close to buying Precision Castparts, a nearly $27 billion industrial company.  Some good background here.  As noted by @PreetaTweets 'Berkshire's largest deal to date is the $26b BNSF buy. Precision Castparts' market cap is $27b, so deal value wd make it Berkshire's largest'

Fruity text but wonderfully funny "Fraudster Rob Terry, the last hours at Quob Park -a new Quindell downfall video".  Link here.

Finally on Mondelez: 'With the stock at around $46/share, MDLZ is trading at 14.4x P/E (post-3G-like-cost-cuts)'. Link here

And finally...

How cool is this hoverboard?  Back to the Future becoming reality?!

(well 'the device only works in a controlled environment with magnets running underneath the surface of the skatepark. The device combines the effects of liquid nitrogen-cooled superconductors and permanent magnets to float above the ground')

Meanwhile this list of seven summer reads is going to be hard to beat I believe.

Have a good week

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