Wednesday, 25 November 2015

Financial Orbit wrap 25/11/15

Five sentences or graphics which sum up the Financial Orbit output over the last 24 hours across the website, twitter account and anything else thought about...

1. Migrant crisis/German economy - Germany's $7 Billion Refugee Boost to Outweigh VW Scandal Fallout.  Interesting mix of two big stories around the German economy (link here).

Staying with Europe, interesting to read about the thoughts from the ECB and the Swedish Riksbank in their respective Stability Reports: 

The ECB said "misaligned" asset prices were "a key vulnerability". While property prices for the eurozone as a whole were broadly in line with historical norms, there were sharp divergences between countries. Governments and, to a lesser extent, private firms faced debt sustainability challenges.

The stability review sounded a note of cautious optimism on the eurozone economy, saying it had "weathered challenges on several fronts" over the past six months. Those challenges include the intensification of the Greece crisis over the summer and the China-triggered sell-off in global equities. While significant amounts non-performing loans remained a concern for the region's banks, profitability and solvency had improved.

Elsewhere I see headlines like this from the Riksbank:
The current high valuations of assets and high indebtedness among households are leading to increased risks in the Swedish economy. A serious economic shock, such as a fall in housing prices, could thus have major consequences. A combination of measures, such as changes to tax relief and the introduction of an amortisation requirement and a debt-to-income limit, are needed to make households less vulnerable and reduce the risks inherent in high indebtedness.
Conclusion from all of this?  Plenty of scope in differentials between perception and reality in Europe...and that is generally good for stock picking opportunities (although you would not really want to be long the whole market). 

2. China – still volatile Chinese consumer sentiment readings with the Westpac MNI China Consumer Sentiment indicator 113.1 in November up from 109.7 in October which was a record low. The highest reading in 2015 was 118.2 in September.

May be volatility in consumer sentiment...but the Shanghai bourse has got quieter.  We have moved into a stock picking zone and I would still say the consumer stocks remain the most interesting area (as backed by a positive underlying structural theme): 

3. Turning to companies you can hear my thoughts on Rolls Royce as broadcasted on ShareRadio earlier today.  

4. Two of the more interesting UK numbers today were Thomas Cook and DMGT.  I write both up here.  

5. I also write up the John Deere numbers which on balance impressed me.  

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