Tuesday, 20 October 2015

Some macro thoughts today

Some macro thoughts today...

US Treasury worried about Europe – semi-annual US Treasury report worried about Europe and calls for more stimulus: ‘it would be advisable for euro area economies to deploy a more balanced set of tools, including fiscal and structural policies, to provide support to domestic demand, particularly investment, which remains too weak’.  The mantra of more stimulus but at least they mentioned structural reforms too! 



Emerging markets – whilst talk of capital outflows from China topped $500bn in the first eight months of this year, according to new calculations by the US Treasury Emerging market equity funds tracked by EPFR Global have just recorded their first positive weekly inflows since June.  Sentiment slowly starting to improve investors should note which equates into opportunities. 


However in terms of any emerging market investment returns the performance of EM currencies vs the US$ so important / influential 
In its latest semi-annual report to Congress on the global economy, the US Treasury dropped its previous assessment that the renminbi was “significantly undervalued”. Instead, the Treasury said the Chinese currency was “below its appropriate medium-term valuation”.

This shows, in my view, that the US authorities are well aware of the above issues. 


I liked this: Brexit - A background guide to “Brexit” from the European Union (link here). 


Got to watch the progression of corporate spreads. Fascinating chart via @eurofaultlines: 



US margin debt – 5 month low
(h/t @DonDraperClone)


Linked to recent hedge fund closures?


China - 'UK Gov’t: China Pres Xi’s Visit Will Unlock More Than GBP 30 Bln Of Deals' (Bloomberg). 


Canada – change of govt as the centre-left Liberals seized a majority of Parliament's 338 seats, marking the biggest gain of seats in Canadian history and ending a nine-year winning streak for the ruling Conservatives.  Canadian dollar down a little but bigger moves in previous weeks.  Apparently Google search data called it perfectly…(link here). 

World GDP and oil – nice correlation!

 
(h/t @sobata416) 

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