Sunday, 20 March 2016

Stories to be thinking about

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

Macro matters:

So the S&P 500 pushes into positive territory for the year...

...of course the Federal Reserve comments during the last week helped:  

I liked this from @Callum_Thomas - a reflection that the VIX index has fallen back over recent weeks and currently is below 15.

Too much recent exuberance?  Hard to believe this given (as @RyanDetrick noted):

'AAII bulls have now been beneath their long-term average of 38.6% for 19 straight weeks.
AAII neutral up to 43%, highest this year.  Surprisingly, the bulls dropped to 30% from 37%'

And the insider transactions ratio is not extended either: 
(h/t @hmeisler)

Additionally as @ukarlewitz noted most sectors are up this year i.e. breadth is pretty good: 

However not everything is great...earnings are lagging a little: 

Meanwhile in Europe following the Euro6bn migrant deal with Turkey inked right at the end of last week all attentions turn again to the EU referendum.  I note the Brexit probabilities are little changed in recent weeks...
(h/t @MSmithsonPB)

...but the UK (Conservative) government is perceived as being pretty dividend.  As the Sunday Times noted today: 'a leadership challenge (to the current PM David Cameron) is an inevitability'.  So much for the healing power of a referendum:

In China I thought this was insightful (via Seeking Alpha):

PBOC Governor Zhou Xiaochuan sounded a warning about China's corporate debt levels over the weekend, stating that the country must develop more robust capital markets.

"Lending as a share of GDP, especially corporate lending as a share of GDP, is too high," Zhou Xiaochuan told the China Development Forum, adding that a highly leveraged economy is more prone to macroeconomic risk.

Positioning in the oil market has strengthened (with the oil price) over recent weeks.  Versus history it is not too extreme yet...
...well there is the concern that Iran wants to get back to 4m boepd:

Hedge funds have not been performing.  As I noted on Twitter:

Hedge funds return chart in today's @FT. I remember a time when the comparison was 100% equity...

Company-related observations:

Striking difference between non-GAAP and GAAP EPS that tells you that the backdrop is not the easiest and that knowing your companies matters: 

This is reiterated by the progress of margins - not many above the 3 year average...

...but even with the sharp deterioration in energy sector margins the more striking aspect is the slight fade in ex energy margins.  Got to keep watching this.  

A few individual equity stories from The Sunday Times

Coca-Cola and other drink makers are poised to sue the government over George Osbourne's new sugar tax

London Stock Exchange could ask shareholders to approve a £21bn merger with a German rival before Britain votes on whether to stay in the EU

Next is set to reveal a drop in 'super customers' buying with high-interest credit, heralding a difficult spell for the high street darling

Monsanto plans Bayer crop science business bid for US$30bn - sounds as if they will not counterbid the Chinese for Syngenta then! 

'As many as 330 Argos stores could close after J Sainsbury moved nearer to sealing a £1.4bn takeover of the high street catalogue retailer'

And in the US hotels sector I noted on Twitter that: '(Chinese) money talks for Starwood. Marriott got bid big or pocket $400m & focus on themselves. I think they do the latter'

And finally...

Kind of interesting on surnames

Really good comparison tool looking at the relative sizes of different Continents (link here): 

(h/t @LindaRegber) 

Have a good week.  

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