Sunday, 18 October 2015

Stories we should be thinking about

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

Macro matters:

Ahead of the Chinese GDP numbers I note this report that 'Increased infrastructure investment is key to stabilizing China's economic growth, a top state advisor said on Sunday, while calling on the central bank to lower the cost of financing for companies and increase overall credit' (link here). 

Well that sounds a little old school and a bit disappointing if it turns out to be true.  Let's take a look at the GDP numbers and go from there. My view is that further stimulus is likely but I liked the (so far) recent efforts towards specific sectors like automotive, housing and the Macau casinos. 

Of course China is not the only country/region where further stimulus is likely.  Surely highly likely that the European Central Bank will undertake further stimulus efforts, closing the gap with the balance sheets of the Federal Reserve and the Bank of Japan...

(h/t @acemaxx)

Bringing the two together was this via @minefornothing: 'IMF data shows Chinese economy will become bigger than the entire Eurozone's during 2015'

Broadening out thoughts to the UK economy I thought this was a thoughtful read on money supply and the velocity of money (link here) from @mmlatest:

'The current environment may bear greater similarity with the late 1960s / early 1970s, when a period of velocity stability gave way to a sustained rise, partly because interest rates failed to keep pace with an increase in inflation, resulting in savers wishing to reduce their money holdings. A velocity pick-up now would guarantee a future inflation overshoot'.  

Of course for the time being there is not too much inflation about as this chart cited by @AlastairWinter noted: 

Staying with Europe, important to remember that the Trokia are returning to Athens: 
'Representatives of Greece’s lenders – the European Commission, the European Central Bank, the European Stability Mechanism and the International Monetary Fund – are expected to return to Athens on Tuesday to start a review that, Greece hopes, will end successfully, paving the way for the launch of talks on debt relief' (link here).  The Sunday Times is talking about plans for a bad bank will be ditched in favour of selling bad loans to various investment banks/private equity houses. 

With the migrant debate still ongoing interesting to note via @CNNTURK_ENG: 'German chancellor Merkel in #Istanbul: We are ready to accelerate Turkey's EU accession process'.  At the right price/level of concessions Turkey could be very helpful to the broader European powers on migrant issues...

And on akin issues, 'Switzerland's main anti-immigration party is set to cement its position as the country's dominant political force in elections on Sunday' (link here)

Useful via @qz on Africa / China: 'China’s extraordinary economic transformation—guided by leaders who prize stability and growth over political freedoms—is being seen by some African states as a model for their economies. Tanzania, for example, which is a democracy, speaks admiringly of China’s example. Others go even further, saying that democracy might not be the best approach for development, that for some countries to succeed, discipline is more important than democracy' (link here)

Company-related observations:

How has earnings season been for you so far?  One view is that ex-oil it has been pretty good...

...but the reality is that 2015 will go down as a year of little earnings growth:

Goldman Sachs numbers really were not that good: 

I read that 'Volkswagen is set to be pushed deeper into crisis after it emerged that the carmaker is facing a record-breaking €40bn (£30bn) legal attack spearheaded by one of the world’s top law firms' (link here)  This one is going to roll and roll...

The first week of the Worldpay IPO in London has gone down pretty well (shares up c. 10% odd).  A good position in a fast moving area I note...

(h/t @cgledhill)

Change is happening to the ways many companies listed on the market operate as this chart via @eurofaultlines noted:

I like selected mining sector shares as value investments currently as noted in some of the metrics below... 

...and this is what I call cost cutting in the mining space as 'driverless trucks now move all iron ore at one of Rio Tinto's Australian mines' (link here). 

Some help for European banks: 

And if you believe The Sunday Times today 'HSBC is leaning towards remaining in Britain after a number of victories in its battle to water down regulatory curbs on the banking industry'. 

Meanwhile The Financial Times notes 'Deutsche Bank’s new head has announced a radical overhaul of the bank’s senior management and structure, parting ways with several top executives and splitting its powerful investment banking unit in two'.  

I see more investors/shareholders are getting frustrated with Syngenta (link here) - an opinion I share as noted here.  

Great read here on why Alibaba spent over US$4bn to buy Youku.  If we did not know it already video is the future...
(h/t @SirSteven)

And finally...

Quiz time: 10 valuation questions from analyst job interviews. At least I got the majority right when I tried the quiz :-) Link here (h/t @dealroom) 

It seems that many do not know who is the Federal Reserve chair:

Wonderful sales panache

(h/t @PlanMaestro) 

Finally I really liked this, 'Infographic: Easy airport hacks to make flying suck less'

(h/t @MatadorNetwork)

Have a good week

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