Thursday, 17 September 2015

Financial Orbit wrap 17/09/15

Five sentences or graphics which sum up the Financial Orbit output over the last 24 hours across the website, twitter account and anything else thought about...

1. Note Switzerland have issued updated economic forecasts.  Growth got nibbled down for 2016 from 1.6%e to 1.5%e...well they are relying on help from continuing Eurozone growth!

A key prerequisite for an improvement in the economic situation is that the global economy remains on an upward course and, in particular, that the Euro zone is able to continue its recovery.

2. Better news for Japanese stocks...foreigners not liking is a positive in my experience!

3. I listened to three UK equity conference calls today.  The common theme: a lack of visibility.  By far the worst was Premier Farnell's where the company is a few months from launching a turnaround plan from the new CEO.  Meanwhile on most metrics life remains tough: 

A general read-through for the broader market?  Keep carefully stockpicking...and keep some dry powder back. 

4. Now moving onto the Federal Reserve.  There will be far too many column inches on all this but my view would be...the 'monitoring developments abroad' comment really does matter.  

Mate that with lower inflation and GDP projections for 2016-17...

...and no wonder they are chilling on rates for another month: 

5. So whilst expectations are eventually for higher rates...

...the reality is that the can has been kicked further down the road (again).  I read that 'January is the new September'...but it is clear to me that the rate cycle is becoming ever more shallow in gradient.  This many years into a 'recovery' that is kind of interesting (and worrying).  

Investing implications?  I wrote this to one correspondent an hour or two ago: 

‘With the Federal Reserve showing greater concern for the global backdrop and pulling down mildly their future expectations for growth and inflation the key conclusion for investors has to be more volatility is imminent as the debate between the need for more stimulus or the start of some policy normalisation continues.  For equities the best gains will therefore be made in areas where sentiment is currently low such as emerging markets/commodity focused stocks.  Usefully these are both areas which will benefit from a weakening in the US dollar which is now more likely given the more muted forward interest rate cycle’

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