Monday, 7 December 2015

Financial Orbit wrap 07/12/15

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. JPM note calls for 76% chance of recession within 3 years (link here).  And the reason?  Corporate margins...


The biggest increase in the recession probability, according to the economists, has come from corporations.

"The particularly sharp moves in predicted recession probabilities since mid-2014 have been driven most prominently by our measure of the decline in margins," said the note.

"Indeed, on most (but not all) of the occasions when this variable fell to its current level, a recession began within a few years. Although continued expansion remains our baseline forecast, we will more carefully investigate the risks of recession emanating from the corporate sector."

Something to watch...and another reason why a lower US dollar would be helpful to many.

2. I muse about Electrolux after its bid for the GE Appliances business falls through...(link here).

3. On macro matters I observe:

Another 7 business days of analysis to come...can we bring the Fed forward a week and get it over/done with?

4. A big oil price slide today with WTI clearly below US$40.  Today I listened to Devon Energy call:

Listening to deals cc. Just the way it should be in the oil market currently: focus on quality assets/cash flow


5. Finally did you see that Keurig Green Mountain was taken out at a big premium?  Yes, but...

Re takeout - $92 per share cash offer represents a premium of nearly 78% - back to mid-May's share price!

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