Sunday, 14 February 2016

Stories we should be thinking about

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

Macro matters:

Bull versus bear face-off again...

...and for the second week in a row the bear won out: 

(Sourced from here)

So where do we go from here?: 

(h/t @DavidInglesTV)

Well as per this chart from the Weekend Financial Times which forward bear market profile are you looking for?  My gut: more like 2000 than there are opportunities: 

And such opportunities are naturally more prevalent when bullish sentiment is low as @jsblokland notes: 

It is a strange world when you have so many global central banks are anticipated to cut rates at this maturity in the post global financial crisis time cycle...
(h/t @acemaxx) 

...and of course the most dramatic evolution has been the Federal Reserve

So what is the reality for the US economy?  Well unless you believe there is a structural rise in the inventories to sales ratio due to just-in-time/e-commerce deliveries this is not the greatest cyclical insight: 

(h/t @SoberLook)

However the retail sales indicator is better...

...and never of course underestimate how important the US consumer is not just to the local economy but the world economy too...

Note which country is second: China.  I read that Chinese 'retail sales over the Spring Festival holiday rose 11.2 percent from the same vacation period a year earlier, with cinemas posting sharp increases in box-office sales, the country’s Ministry of Commerce said in a statement Saturday' (link here). 

After a week's holiday the Chinese markets are back tomorrow (Monday).  Watching not just the local stock markets but also the Chinese yuan all critical.  Here's a nice graphic about how the Chinese currency has evolved over recent years: 

Gold has had its best week since 2011...and so inflows are strong!

Smaulgld put together a great list of gold/oil ratio charts here.  My favourite is below.  Gold remains a correct cornerstone to a portfolio but oil is where the value traders are correctly looking: 

Talking about oil this is a great read on the current geopolitics of this area.  I cannot do justice to this excellent MUST READ long piece in a short excerpt but to wet the appetite I liked the observation that:

'the Saudis will not change course until Russian output declines, Iraq’s stagnates, Iran’s output growth is stunted' 

And - of course - it is seasonally a positive time for oil (link here): 

(h/t @David_Stendahl)

Elsewhere, '(A) clear majority of 58 percent of the Britons expect U.K. Prime Minister David Cameron to get a bad deal out of negotiations for a reformed British membership' (link here).  I still believe that the UK will vote to remain. 

Moving to Southern Europe and specifically Greece: "There are differences among the lenders on Greece's pension reform that are delaying the whole process," Tsipras said without elaborating, in an interview in the newspaper "Sunday's Avgi" released on Saturday (link here).  The pension saga is going to run and run...and the Greek banks remain under pressure: 

(h/t @GreekAnalyst) 

Still - as noted here - it is not all bad in Europe as parts of Eastern Europe (admittedly often formally outside the Euro single currency zone).  Well you can see one of the rationales...

A couple of final US politics...

(h/t @sardnas51) 

...and US finances

Company-related observations:

The mining and related investment malaise continues (link here):

32.1 billion digital red envelopes sent via WeChat in New Year holiday according to this piece - good news for WeChat operator Tencent.  

(h/t @WeiDuCNA)

Banks had a clobbering during the week...a high proportion of FTSE-100 earnings...

...but valuations are low:

(h/t @eurofaultlines).

The correct view is to be opportunistic despite the Sunday Times story that 'European banks have been blocked from raising billions in new long-term loans, prompting fears that central banks may need to step in with emergency loans'.  That sounds like a lot of fear out there already...

A few other stock insights from today's Sunday Times:

Oil: 'North Sea tax bailout is understood that Oil & Gas UK...suggested measures last week that included a permanent and significant cut to the 67.5% and 50% headline rates for oil fields and more recent developments' 

Anglo American: 'plan to break up the company by selling or closing most of its mines and shedding two-thirds of the 135,000 strong workforce...iron ore and coal operations, which together account for 45% of turnover to be sold, shut down or spun off'

EasyJet: 'Travel chiefs: Brexit danger to UK tourists...EasyJet boss says cheap flights at risk'.

And finally...

Well it is Valentine's Day - are you thinking more about markets?

(h/t @Trader_Dante) 

And if you are wondering just who is the biggest chocolate consumer?  Here has all the answers:

(h/t @ZSchneeweiss) 

Have a good week.  Don't forget to sign up for a free trial of my new macro, stocks and other reports (a summary of this week's output can be found here).

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