Sunday, 20 December 2015

Stories we should be thinking about

A few finance and related stories we need to be thinking about before Monday morning:


Macro matters:

Much of the UK press are talking about government hopes of a Europe stay/leave mid-2016 referendum after 'getting a deal' with the other EU powers during the first few months of next year. This article notes that maybe this is not the case: 

Amid the crescendo of media prattle and speculation, there will emerge the fateful last-minute complications, stage-managed to achieve maximum dramatic effect. Then, at the 11th hour and 59 minutes, the "final" agreement will be delayed. It will be back on the agenda for the autumn, when we see the "play" repeated, and again in early 2017, with delays all the way to late 2017. 

Staying in Europe, today is the Spanish General Election day and the first exit polls are due in an hour or so as I write.  Ahead of this all you need to know before which promises to be a close vote here via @thespainreport:

In terms of background economic growth has been reasonable in 2015...but GDP remains clearly below the 2007-8 peak: 

(h/t @MxSba)

On a related front I liked the below chart via @IIF which shows that Spain (unlike Italy or Greece) has developed market characteristics. Implies still significant structural reform requirements for a variety of peripheral European countries: 


Of course with structural change may come a greater variability in economic outcomes. Perhaps then no surprises the UK is highly cited here:


(h/t @27khv)

However...flexibility brings growth of course as this Financial Times article notes with a 2.5% level anticipated for the UK: 

UK among best of the world’s advanced economy performers in 2015


Technology helps productivity!  Very interesting chart cited by @Tonysangle from this original article:

Following the Federal Reserve's first rate increase since 2006 a critical question about the pace of further rate increases centres on whether there is any US inflation or not.  As this great chart cited by @jsblokland shows...it depends on what measure you are using: 


What perhaps is clearer is that inflationary expectations have fallen: 


(h/t @RonStoeferle)

Finally some inflation in Japan! (link here)

'The cost of staging the 2020 Tokyo Olympics will hit nearly $15 billion -- six times the original estimate… Rising personnel and material cost are largely to blame'

Interesting on oil: '...hedge fund manager Pierre Andurand told investors that crude prices may fall to $25 a barrel or even lower in the first quarter...Andurand, whose hedge fund has gained 8 per cent this year, said he expects global supplies to expand by 1.6 million barrels a day, and in Organisation for Economic Cooperation and Development nations by 900,000 barrels a day in the first half of 2016. Demand growth around the world will slow and begin to decline around 2022, he said'.  Full article here

Australian house price ratios...wow.  And just to think that mining has been in crisis the last few years.  
(h/t @eurofaultlines)

Bitcoin prices have been highly volatile during 2015.  But just maybe blockchain spend might be going up sharply (link here):


Meanwhile sticking with finance and technology.  Fascinating graphic here showing the fast rise in global VC fintech investment over the last couple of years.  With the deal count not rising that quickly more monies per deal being raised.  Over-enthusiasm (higher valuations) as the search for unicorns continues...?

(h/t @cgledhill) 

Yes, it has been this type of macro year
(h/t @PlanMaestro)

Company-related observations:

Yet another high profile Rolls Royce shareholder exits into the night (link here).  Big 2016 potentially for this stock...super low sentiment but recent rumours of a bid approach/radical asset split driven by the big activist shareholder.


'Old Mutual Global Investors chief executive Richard Buxton told The Sunday Telegraph that he sold his stake in Rolls-Royce less month, after the company issued its fifth profit warning in less than two years. Buxton blamed Rolls-Royce for its lack of guidance...'

Financials are popular choices in 2016 preferred stocks lists as the sector often outperforms at times of higher bond yields but as this article highlights new rules in Europe may limit the capability to payout dividends and related.


(h/t @ZSchneeweiss) 

Syngenta should be well bid on Monday: 'ChemChina, as the state-owned company is known, offered to purchase 70 percent of Syngenta now, with an option to acquire the remaining 30 percent of the company at a later date, said the people, who asked not to be identified because the information is private. Basel-based Syngenta, the world’s largest pesticide maker, will hold a board meeting before the end of the year to vote on the deal, the people said. While talks are advanced, no agreement has been reached and there’s no guarantee a deal will be completed'.

Fascinating mega cap market valuation evolution table.  Spot the trends here to make a lot of money:
(h/t @paul1kirby)

Talking about growth stocks nice graphic showing Facebook user profile geographically:


(@ianbremmer)

I would agree however that despite the strategic positives in the space, tactically valuations are pretty full following - as shown in the graphic below - strong appreciation in 2015:

 (@larryfooter)

Finally a few stories from today's Sunday Times:

Shire - 'preparing to deliver a knockout blow in its long-running battle to buy American rival Baxalta by adding an £8bn cash sweetener to its bid'

Challenger banks - 'bosses of small lenders told Treasury officials last week that tough new EU capital rules could mean their businesses were better off outside of the single market'

BHP Billiton - 'set to cut its dividend in the new year, becoming one of the last the big miners to sacrifice payments to shareholders in the face of plunging commodities prices'


And finally...

Not done your Christmas shopping yet?  Well there are others (link here):

Despite early retailer promotions meant to entice shoppers, 17 percent of Americans had not started holiday shopping about a week before Christmas, one percentage point less than last year, according to a recent Reuters/Ipsos poll.

Have a good week

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