Friday, 2 October 2015

A few macro and related thoughts today

A few macro and related thoughts today...

Europe – Draghi in a speech: Economic Growth Is Returning, Real Progress In Stabilizing Euro Area Past 3 Years, Further European Integration Is Required.  Did he read his colleague Praet’s speech yesterday which negatively contrasted Eurozone growth with that of the US? (link here).  Recall that amazing chart...

Club Med news: Greece – head of the Eurozone bailout fund has played down the likelihood of a Greek debt haircut saying the country was already benefiting from generous loan terms.  Spain - Spanish PM Rajoy: General election will be on December 20th.  Both stories are going to run and run for the rest of the year…

Emerging markets - El-Erian: Emerging markets are 'completely unhinged' (link here). Seems a little bit over the top...although clearly it is a tough environment as noted here on Fast FT:
Capital flows to emerging markets will turn negative this year for the first time since 1988 amid disappointing economic growth in many EMs and the prospect of rising US interest rates, the Institute of International Finance said on Thursday.
The IIF in a report predicted net outflows of $541bn, compared with inflows of $32bn in 2014

US - US Tsy Sec Lew Urges Congress To Raise Debt Limit Amid Weaker Tax Receipts, Sees Extraordinary Measures Exhausted Around 5 Nov.  Meanwhile a close Friday below 1915.25 would mark first 3 week fall in S&P futures for 29 weeks and be lowest weekly close for at least 50 wks (latter statistic via Predicted Markets)

Meanwhile US auto sales were strong...


...but look at the maturity of car loans!  


Sentiment - AAII bullish sentiment has never been below 40% for longer than it has now (31 weeks).
  

That means of course why few believe this...


...and hence the average investor prefers the low beta world:



Put all that together and I still perceive stockpicking opportunities in some of the non low beta sectors...

NFP numbers - out later today and a big focus for a lot of people...but recall that wonderful chart I showed yesterday:
Here is a myth-busting link about this data (link here). 

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