Tuesday, 29 December 2015

A few macro stories today

A few macro stories today...

UK prospects – A Times economist survey concluded Britain is facing higher taxes if the chancellor is to meet his goal of eliminating the budget deficit by 2020, interest rates are expected to rise far earlier than market expectations, with first increase April-September, house price inflation should moderate and cheap oil will hold down consumer prices, leaving households with more of their wages to play with. The European Union referendum, likely to be held in the summer, could slow growth. 

Interesting stuff of course but perhaps inevitably for a survey horribly generic.  Anyhow picking up the consumer spending part influenced by cheap oil...also influenced by a worrying propensity to borrow!


Global trade - As per the Financial Times interest groups building on EU's decision yes/no on China market economy status.  Decision in February. Now you can see why President Xi was assiduously touring for much of 2015 handing out trade deals etc.


Oil - as I noted earlier on Twitter:

Wanted to make money in energy/related stocks in FY15? Either trade them...or buy those getting taken over

Talking about oil...

Russia/oil – a poor oil price pushed USD/RUB to its highest close on record in the 72s. Noteworthy that this has been somewhat of a line in the sand in the past. The all-time intraday day set last December was at 79.18.

Saudi/oil – Saudi budget saw big reductions in oil price subsidies as the govt battles a 15% of GDP budget deficit.  Internal price rises due to lower subsidies include - nat gas: +66%, ethane: +133, gasoline: +50%.  A good link with more details here.  

And look at that default probability...


US economic insight “2015 will go down as the first year since 2008 that the Dallas Fed was negative for an entire calendar year”. Great insight and chart here: 


Asia – quieter stock markets today.  I did see this however: all 22 bond traders, analysts and others surveyed forecast China’s corporate default rate will rise in 2016.  Normally I do not trust unanimous surveys BUT in this case I think it is reasonable to anticipate a rise.  


Of course the big question is whether too much pessimism is priced into the market already?

Elsewhere in Asia this is noteworthy: “Mark Zuckerberg can’t believe India isn’t grateful for Facebook’s free internet” – interesting report on matters surrounding net neutrality and emerging market development.  

And finally - “So you want to be in charge of monetary policy” – a Fed game! (link here).  

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