Monday, 14 September 2015

A few macro and related thoughts today...

A few macro and related thoughts today...

BIS / emerging markets – from the latest BIS report, 'investors increasingly focused on growing vulnerabilities in emerging market economies (EMEs), particularly China, as they reassessed the global growth outlook'.  BIS Fears The Financial System Is "Acutely Vulnerable" To US Monetary Tightening.  

Just remind me again who is on the board of the BIS? Just almost all of the world’s leading central bankers…Not too much progress on debt either. 



Europe – apparently the answer is more integration in comments made after a meeting of EU finance ministers over the weekend at least as per ECB Executive Board member Benoit Coeure:

“The governance framework as it stands today is not fit for the purpose of generating strong and sustainable growth that is required,” Coeure told reporters in Luxembourg on Saturday after a meeting of European Union finance ministers. “We need to further share sovereignty over our economic, fiscal and financial policies.”

Maybe it is just easier to have more QE...as apparently hoped by the majority now:


Of course the other huge debate in Europe today is around migrants with the German decision to temporarily impose border controls with Austria.  This piece was useful...although I felt some of the last few paragraphs were a little over the top:

“The danger is that these sort of temporary suspensions happen more and more and this would be a big hit for European corporations who benefit from the good aspects of the single market and open borders,” he said. “It could be seen by opponents of the EU as the start of the EU’s dismantling.”

And to put everything into context...


China – a range of 5% already today on the Chinese market following economic data out over the weekend: ‘Bloomberg’s monthly gross domestic product tracker was at 6.64 percent last month, barely changed from July. Industrial output missed economists’ forecasts Sunday, while investment in the first eight months increased at the slowest pace since 2000’ (Bloomberg).  Personally I thought the numbers were ok and with retail sales just above hopes shows continuing ‘switch’ of the economy.



EM bad debt - that is not to say that China is flawless...back to the aforementioned BIS report: 

A ratio of credit to gross domestic product, a measure of how much private-sector credit has deviated from its long-term trend, stands at 25.4 percent in China, BIS said in a report on Sunday. That’s the highest of any major economy and compares with 16.6 percent in Turkey and 15.7 percent in Brazil.
“Early warning indicators of banking stress pointed to risks arising from strong credit growth,” according to the bank. Historically, a country with a ratio above a 10 percent threshold has a two-thirds chance of “serious banking strains” occurring within three years, BIS said.



Macroprudential ‘Sweden’s central bank governor has warned that new crisis-busting tools policymakers are embracing around the world to counter asset bubbles and other financial dangers are susceptible to political inaction and turf wars. Stefan Ingves, governor of the Riksbank, said so-called macroprudential policies — such as capital requirements and leverage limits — had so far failed in Sweden where house prices and personal debt levels have soared to record levels. “Macroprudential, particularly if markets are going up, up, up is about saying ‘no’. Apparently that’s hard to do,” Mr Ingves said’ (FT). Very true

Of course whilst macro remains important I continue to believe that we are in the exciting early stages of a period of positive stock picking opportunity.  Correlation statistics like below just accentuate that thought...


And finally via @freakonometrics:

"Why are there so many (___) in (country)'" top researches in Google, for various countries

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