Sunday, 13 September 2015

Stories we should be thinking about

A few finance and related stories we need to be thinking about before Monday morning:

Macro matters:

A big upcoming week for the Federal Reserve so how should they be graded on their communication of monetary policy so far this year?  I am getting a bit tired of the 'data dependent' cop I would give them a 'C' currently:

At least household financial obligations versus disposable personal income is much lower than a few years ago meaning any (small) rate rise is not going to have too much immediate impact...

(h/t @ukarlewitz)

...of course that is not to say that the US government are not still continuing to borrow.  Amazing to see how often there is a deficit versus a surplus: 

A tough last week for Brazil with debt downgrades and some shabby economic statistics.  Nice chart from @JLyonsFundMgmt showing the extend of the Brazilian ETF performance malaise: 

Am I surprised then to see a story (paywall) with this headline appearing on the Financial Times website earlier today?:

Value investors call bottom to Brazilian plunge

The rise and rise of smartphones (and tablets).  The decline of desktops quite amazing...

(h/t @BenedictEvans)

The European migrant crisis gets ever more complex with stories today of a potential change in German immigration policy.  Europe still struggling for coherence on many issues... 

'Germany is reinstating controls at its borders with Austria as Europe's top economy struggles to cope with a record influx of refugees, according to media reports.
Passport checks had been abolished for countries within Europe's Schengen zone, but the decision to bring back controls is expected to be announced by Interior Minister Thomas de Maiziere at a press conference on Sunday evening'
...and as the Wall Street Journal noted:

"Europe today doesn't seem to
know where it is going or what

Western civilisation is for"

Hard not to disagree with the final paragraph of this article on oil that:

'Leaving purely financial speculation aside, oil prices cannot go up for any extended period while the Saudis are teaching their oil class to the frackers. So long as the U.S. shale industry reacts to price rises with production increases, prices will keep falling back. They will stabilize at a level acceptable to petrostates only once that response becomes muted. No victory announcement will be needed: Things will just look peaceful again'

Of course the impacts go wider than that - look at the compression in (Scottish) oil revenues.  An independent Scotland would have really struggled: 

The low oil price makes you wonder just how long Russia can continue to finance these epic (relatively speaking) military exercises: 
(h/t @JSaryuszWolski)

Of course China is the largest consumer of many commodities at the margin: 

And what to think of their new data released over the weekend?  Hard not to agree with this comment by @HaidiLunCNA:

Inklings of rebalancing in August China data (y/y): IP: 6.1% (est 6.3%) Fixed asset investment: 10.9% (11.2%) Retail sales: 10.8% (10.6%)

Company-related observations:

Interesting for Facebook

'Instagram is one of the first apps to take advantage of Apple’s new “3D Touch” display on the iPhone 6S and 6S Plus, which the company unveiled with other new products and updates on Wednesday. 3D Touch enables the iPhone 6S and 6S Plus to respond to three different levels of force and gives users new shortcut screens. The result is a nimbler and more visually pleasing navigation interface (link here)'
Twitter has had a lot of critics recently but this piece indicates some potential worth:

'Twitter a powerful tool to predict corporate earnings? Yes, according to research from New York University. "It's guided in the concept of wisdom of crowds -- a group of diverse problem solvers can predict outcomes better than experts," said Eli Bartov, a professor of accounting at NYU's Stern School of Business and one of the report's authors. The researchers analyzed 998,495 tweets on the social media site during the span of four years in the nine days leading up to a company's earnings report. The study tracked 3,662 Russell 3000 firms'

Some pretty firm words from the Royal Dutch Shell CEO.  I see value too.

Investors’s fears that Royal Dutch Shell will fail to complete its planned £43bn acquisition of BG Group have been exaggerated, Shell’s chief executive has said. BG shares are trading at a substantial discount to the value of Shell’s offer, suggesting some in the market are concerned the deal will not go through.

But Ben van Beurden told the Financial Times that the two companies’ share prices had been “knocked about” by recent turbulence in stock markets, and their valuations were driven by “risk aversion and volatility at the moment, rather than careful considered pricing”.

He reiterated Shell’s commitment to maintaining its dividend, even though the shares had an “outrageous” yield of about 7.8 per cent, reflecting investors fear that the payout could be cut.

In the UK oil sector there was this transaction too last week:

Excellent on the UK 'living wage' debate from @LukeJohnsonRCP in today's Sunday Times:

And finally...

Global Population top is a changing world...

1 @facebook
2 China
3 Tencent
4 India
5 @WhatsApp
6 @LinkedIn
7 United States
8 @instagram
9 @twitter

10 @Snapchat

(h/t @ValaAfshar) 

A great read here titled 'How to achieve your goals faster' which includes the observation:

'It’s better to focus on five important goals that we can fully accomplish well, rather than 25 goals we perform mediocrely'

Have a good week

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