Sunday, 10 January 2016

Stories we should be thinking about

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

Macro matters:

Well what a last week (first week of the year)...

...but this has been wonderfully put into perspective by this observation from Horan Capital Advisers: 

For stock investors, the poor market performance to start the new year was not what market participants expected. Most readers have seen the statistic that the 5.96% decline in the S&P 500 Index so far this year is the worst market performance to begin a year on record. In an effort to keep things somewhat in perspective,
  • since 1928 there have been 421 worse 5-day periods for the S&P 500 Index. (h/t @RyanDetrick)
    • in August, the 5-day market decline was -11%.
    Well certainly the Barron's indicator is cautious...

    ...and not many bulls out there

    Meanwhile in another chart via Bespoke Invest of course the average stock is down much more than the index (which strikes me as suggesting - in combination with the lack of bullish sentiment above - the range of stock picking opportunities at the margin). 

    So where do we start the new week?  With the volatile Chinese market of course.  Nice chart on this via the Petersen Institute (link here): 

    What an unusual report out of Sweden (link here): 

    'in the back-to-front world of negative interest rates, Swedish banks are grappling with yet another odd development. Deposits -- coveted as stable funding during normal economic cycles -- are growing at an uncomfortable pace for Sweden’s four biggest banks'

    Still that is not discouraging migrants to come to Europe with another 1m migrants anticipated in 2016 by the German government (link here). 

    I think @Smaugld may well be correct that the US has suffered peak silver production (link here):

    "Dividends: the biggest driver of equity returns".  Interesting article via @valuewalk:

    Very interesting on issues around Saudi Arabia, Iran...and Syria (link here): 

    'Some Western diplomats said the Saudis’ decision to execute al-Nimr—when they knew full well it would antagonize Iran (and the U.S., among others)—seemed specifically designed to thwart the major Syrian peace conference scheduled for January 25 in Geneva. Peace talks without Saudi Arabia and Iran, powerful backers of opposing sides in the war, would be a waste of time…But the Saudi royal family, if it is to survive, must keep the country’s powerful extremist Sunni (or Wahhabite) clerical establishment on its side. That means that the monarchy wants to persuade Washington that Saudi Arabia is a firm counterterrorism ally while demonstrating to its subjects at home that it will protect the conservative religious core of the Wahhabi sect'.

    Staying on politics, there's a General Election in Taiwan in just under a week's time which the current opposition - and much less China-friendly DPP party looks set to win.  What this may mean is discussed here

    'Taiwan may well find common ground with the many economies in the region that are trying to manage the deleterious effects of China’s slowing economy. Regional bilateral free trade agreements and Taiwan’s membership of the Trans-Pacific Partnership are policy areas that are likely to receive more attention'

    Nice collection of technical charts on corn - which I believe is offering good value from a FY16 basis (link here).

    Here's Why Formula One Engineering Is Invading Supermarket Aisles (link here).

    Company-related observations:

    Winners and losers from the retail season?  I liked this piece from Seeking Alpha which included the observation:

    Lesson #1 - Early and late: 25% of all shoppers purchased a Christmas presentbefore Halloween, while the Black Friday to Cyber Monday period disappointed. A late flurry of shopping was a boon for many large retail chains, as well as Amazon (NASDAQ:AMZN), FedEx (NYSE:FDX), and UPS (NYSE:UPS). Trading around anecdotal reports of Black Friday traffic now looks like an exercise in futility.

    Wow, just look how much Netflix is spending...

    Stock picking opportunities post the UK floods?  Link here talking insurance to construction.

    Yum! Brands is currently teasing restaurant sector watchers:

    Veteran fund manager Neil Woodford has called for the break up for pharmaceutical giant GlaxoSmithKline…He said the pharma behemoth was ‘like four FTSE 100 companies bolted together’ and that it does not ‘do a particularly good job of managing all of the constituent parts’. I would agree and think the stock is cheap.

    Twitter versus Facebook from a ratio of users perspective.  The latter is only x20 the market cap of the former...

    And finally...

    Want to know the future of email?

    'Push notifications are the natural extension of email, and with the rise of wearables and Internet-connected-everything, it’s only going to get worse. These notifications act like text messages at a time when people are already texting constantly'.  Link here.  

    Have a good week.  Don't forget to sign up for a free 30 day trial of my new macro, stocks and other reports (link here).

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