Thursday, 3 December 2015

Financial Orbit wrap 03/12/15

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. Global liquidity – still poor...this reserve measure indicative of some of the problems in a higher US dollar world for a broader range of countries.


(h/t @Eurofaultlines)


2. Not too many UK corporate reporting today but I wrote up DS Smith here and observed:

Corrugated packaging is hardly the most exciting area but with good linkage to evolving consumer trends and the need for underlying users to differentiate their product...

...a prospective x12 EV/ebit ratio with a 3%+ yield (and that aforementioned good free cash flow) is no disaster.  I can see 450p over the next year.

3. The main event of the day was - of course - the ECB meeting...and was there quite a few surprises!  I wrote up my thoughts here under the title of 'ECB policy day: why I disagree with "Draghi has over promised and under delivered"  concluding:

 So if you should be anticipating a higher euro and a lack of returns in bonds, what about European equities?  For me a continued lack of structural reforms in Europe plus a general lack of cohesion (migrant crisis, political angst) cannot fill you with huge confidence but the above shifts imply specific sectors have the scope to outperform.  Why?  Pick-up yield value and low general sentiment.  For me the two naturally meet in certain sectors that traditionally perform at the time of a bond yield increase:

Much to do in the European multi-asset class space. I see specific and not general opportunity especially in equities.  Got to be active...

4. I also wrote up some thoughts on Dollar General the US discount store player after their earnings here...

5. ...and also some thoughts here on the General Electric / Alstom deal after a presentation by the former following deal conclusion recently.  

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