Wednesday, 14 October 2015

A few macro and related thoughts today

A few macro and related thoughts today...

Markets – Euro pushing up to near 1.14 against the US dollar.


Linked to this weakness, Goldman Sachs say no US rate rise over the next 6+ months (link here).  Such fade better news for global balance and markets (and to help stimulate European economic reform)…although shorter-term factored in as Tuesday was 10th day in a row that the Dow had broken the previous day's high. Run has extended to 11 days twice in last 25 years (as per Predicted Markets). 

Talking about Europe reform ‘Italy’s new budget law…is expected to include a measure that would increase the limit for cash payments in Italy’s stores from Euro1000 to Euro3000’ (FT).  Well that is one way to try to bring ‘grey economy’ assets (c. 20% of Italian GDP equivalent?) into the taxable economy…

Europe politics – chat that Portuguese Socialist party to form an anti-austerity government supported by the radical left/Communists.  Would be still pro-euro…for the time being.  One to watch if they can pull this off.  Recall Portugal generally thought of as the weakest Eurozone economy after Greece so important to follow.

Russia – some reports say that the Russian govt to hold the ruble down to help boost the non-resources sectors of the economy.  Bloomberg saying though that Russian sources refuted this.  Tells me that pressure on their economy still high and everyone wants a weaker FX rate to help out…

Meanwhile Russia ranks badly on this measure (appears to me very FX centred):



Asia - Singapore escapes from recession as 3Q GDP QOQ +0.1%...  Meanwhile consumer prices in China +1.6% in September from a year earlier, easing from a 13-month high of 2 per cent in August, and below expectations for a 1.8 per cent gain. Producer prices were down 5.9% from a year ago (43 successive months).  Asian markets down today.  

Thankfully the consumer story remains strong...



Oil – interesting letter from today’s FT:


What US businesses worry about - always taxes but not sales so much now...


...in larger companies it is certainly the US dollar so far this third quarter earnings season: 

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