Wednesday, 25 November 2015

Some macro thoughts today

Some macro thoughts today...

Europe diplomacy ‘Brussels has told Downing Street it must finalise its negotiating position on EU reform within a week if David Cameron is to achieve his goal of securing a deal by the end of the year’ (FT).  Feels to me as if these talks will continue into 2016…

Europe banks – the Euro45bn eurozone-wide deposit guarantee scheme which would cover all bank accounts up to Euro100k within the decade.  The immediate view from German: ‘Bundesbank's Weidmann Rejects EU Deposit Insurance Plan’ (via Bild).  An inevitable response but perhaps fearful of this story in today's Financial Times:

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).  

Italy - a good idea:

'...plans for €2bn in new spending in response to the November 13 attacks in Paris. While €1bn would be used for security and defence purposes, another €1bn would pay for cultural programmes.
This includes more money for disenfranchised neighbourhoods on the outskirts of big cities, where there are often clashes between Italians and immigrants, but also a €500 bonus for every 18-year old to spend at theatres, concerts and museums. The idea, according to Mr Renzi, is to reinforce their sense of being guardians of Italy’s vast cultural heritage' (FT)

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): 

Oil – hedge fund short bets hit highest level this year.  Sounds like best news for the oil price for a while!


And finally, keep an eye on global liquidity.  How to get a boost?  Not just more QE but also a weaker US dollar which helps rebuild global reserves levels...

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