Sunday, 21 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:

A better week on global markets...



(Sourced from here)

So we have a kick-off to the UK's EU referendum on 23 June.  I saw this fascinating set of polling results from today's Daily Mail.  Check out the proportional "don't know's"...

(h/t @fletcherr)

A good source to keep on turning to is this one  with its useful poll-of-polls analysis (currently 54%/46% in favour of 'remain/stay').  As for the press I see that The Sun on Sunday (surely a guide to the views of the UK's most popular newspaper) has come out on the side of 'Leave' (link here).  

And to show it is not just the 'leave' campaign that has its share of publicity seeking loons I liked this: 'the six most negative pieces of 'remain' campaigning in the EU referendum (so far)'

Often in markets the greatest fear is fear itself.  Certainly this has impacted the volatility of the pound.  Peaking during the first half and then declining in the second half of the year post a remain/stay vote seems a plausible scenario to me.  If you are visiting the UK over the balance of the year locking in your holiday monies sooner rather than later feels reasonable to me.  


Of course calling from a higher pound against - say - the US dollar flies against US interest rate differential theory even if generally all forward interest rate expectations are still being compressed.  As noted here numerous times over the last few months this has been more than fully factored in...

(h/t @AlexWhite1812)

...and this means that selected emerging market currencies can start to recover a little after a very difficult last year or so: 


I view then Friday's US inflation numbers (core inflation above 2% as per this chart via @FastFT) as more of a curve ball potentially for the bond market where I still see limited value...


...especially after such a sharp move in the Treasury markets recently.  

(h/t @ukarlewitz) 

And staying with the US economy a fascinating insight on the world's currently largest economy.  People certainly do work hard for their money
A couple of pieces via Seeking Alpha first on oil where optimism on a deal continues to build: 

'Consultations on a preliminary deal between leading oil producers to freeze output should be concluded by March 1, Russia's energy minister Alexander Novak said, after a group led by Russia and Saudi Arabia reached a common position last week in Doha. Novak also announced that talks between Venezuela and Iran were still ongoing, and "discussed with colleagues" that an oil price of $50 per barrel would suit consumers and exporters in the long term, but did not elaborate'


Second on China some changes in market regulatory oversight.  No surprises here: 

'China has removed the head of its securities regulator following last summer's $5T stock-market rout, an unprecedented government rescue, the failure of a "circuit breaker" mechanism, and a renewed crisis in January as plunging Chinese equities reverberated across the world. Xiao Gang, who had been chairman of the China Securities Regulatory Commission since March 2013, will be replaced by Liu Shiyu, chairman of the Agricultural Bank of China'.

Talking about China lots of chat about them adding to their gold reserves but actually Russia has added more recently.  Nice chart via @Smaulgld here

A big drop off in Nigerian inward FDI: 


Of course certainly something to do with the currency: 


Did you see where Greece ranks on cumulative GDP decline.  Not pretty...and the only really clear post WW2 entry: 
(h/t @jsblokland)

What is the latest on the US Presidential race?
This is good: 'What are the most common investment mistakes made by most stock market investors across the world?'

"[The single biggest mistake that keeps investors from reaching their goals is] themselves"


Company-related observations:

Wow a bit of a compression in S&P 500 earnings growth: 
Still the most dynamic place to be are the domestic earners.  Yes another rationale for a weaker US dollar: 

I read in the Sunday Times that Billiton 'to slash US$6.6bn payout' via halving their dividend.  We'll see during the week.  At least the iron ore price is recovering a little...


...and you also should be careful of high stated dividend yields - often they tend to be cut: 

A few more Sunday Times stories:

'Lloyds Bank in talks with the Bank of England to win approval for £2bn dividend to shareholders'

'J Sainsbury could this week seek an extension to the deadline for its £1.3bn bid for Home Retail Group after...Steinhoff International pounced on Friday with an eleventh hour approach' 

'BT avoids break-up in battle over broadband...rivals had called for BT's Openreach division...to be split off'

'American tech giant Rambus has held talks about an £850m bid for Imagination Technologies the ailing iPhone chip designer' 

'GlaxoSmithKline has been dealt a fresh blow after America's drug watchdog said it could approve a generic version of its biggest-selling product early next year.  The US FDA has accepted a submission for a cut-price copy of Glaxo's asthma drug Advair, made by rival Mylan' 

Meanwhile I thought this was interesting on smartwatches versus Swiss watches.  Not so much the latter has declined so much rather the former has increased: 


And finally...

"On the same latitude. Interesting maps. Transposing N American and Eurasian/African cities"



(h/t @paul1kirby)


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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