Sunday, 3 April 2016

Stories we should be thinking about

Ahead of the new working week here are a few finance and related stories to be thinking about.

Macro matters:

Not the easiest last week...especially if you were an investor in Japan...



(via www.dshort.com or here

...and it has not been the easiest strategic time to be an investor either:


(h/t @JordanEliseo via from this link)

Of course the compression of returns over the last ten years reflects the global financial crisis impact around 2008 and is despite the large amounts of stimulus enacted in the last seven or so years.  Today the big issue is that growth is generally patchy around the world as evidenced by last Friday's global manufacturing PMI numbers below:   


That's why it is a stock picking centric market and not a blind buy one. 

Onto a few other stories.  Let's start in the US and I did not realise the proximity between the vaults of the Federal Reserve and JP Morgan.  No wonder gold price suppression conspiracy theorists are certain something is going on: 

(h/t @smaulgld)

The US Presidential race is of course another one replete with controversy and conspiracy. I see Barron's have given a view on who they think the Republican candidate should be...

...not that the betting probabilities agree: 
On a related front did you see what Donald Trump said about the US stock market?

Trump said that economic conditions are so perilous that the country is headed for a “very massive recession” and that “it’s a terrible time right now” to invest in the stock market.

So what is happening in Europe?


(h/t @Businessnewszzz)

I was sent this by @InforBritain...


...although I do wonder if an 'out for Britain' could use the same data and come to completely the opposite conclusion! 

Anyhow in terms of Europe there is still that great dichotomy.  As a region it has hardly worked related to that other great 'western' economic zone the US in the sole purpose of creating wealth...


...but despite all the recent challenges the euro is creeping back.  Europe may have challenges...but it is not totally holed...


...although some potential late Q2 2016 excitement does await: 'WikiLeaks document reveals IMF's prediction about Greek bailout & EU referendum' (link here).  

On the former did you see how the Greek Prime Minister responded in a letter to the head of the IMF Christine Lagarde?  And I thought the negotiations were progressing ok...

"Dear Christine,  I am writing to you to express my deep concern about publications on the position of IMF officials with key roles in the Greek program.
"The first issue is, of course, whether their position reflects the official IMF view. Using a credit event as a means to pressurize Greece and the other member states is clearly beyond the bounds of the negotiation process as we understand it.
"The second issue is whether Greece can trust, and continue negotiating in good faith with, IMF officials who express views such as those expressed in these publications. Particularly so as they seem to be threatening to delay the process in the belief that only a credit event will work to extract concessions. Successful negotiations are often difficult but they always require trust and credibility from all sides. I sincerely hope that the IMF position is to reach a quick, successful and sustainable conclusion of the review and I am sure you will take all necessary measures to ensure that the negotiation process will remain on track... Yours Sincerely, Alexis Tsipras."


The EU referendum is not the only challenge for the UK economy.  I read in today's Sunday Times that 'Bank (of England) to hold rates for three more years'.  Got to say feels plausible to me...

A really good presentation via @RBS_economics here centred on the UK trade deficit.  Here's my favourite couple of charts:


Inevitably concerns about the UK economy makes people wonder about the London property market which - as noted in the below chart - has performed rather well against general UK house prices.  This has reflected a trend in other countries too for major conurbations to outperform.  City living remains in vogue...
(h/t @paul1kirby)


Sector and companies: 

"Using a dataset that covers period from 2008-2013 we find that high Google search volumes lead to negative returns".  You can read about why here.

Good summary on the failed Anbang deal for Starwood Hotels here.  It does make you wonder about other deals including the Syngenta/ChemChina one - but for me it all depends on the combination of rationale, financing and political clearance.  I think the latter deal still has this. 


I undertook some analysis on Financial Orbit Immediate on the Chinese banks and concluded there were better opportunities in the broad markets.  Well, a rising nonperforming loan ratio and lacklustre profitability expansion is hardly classically the best combination: 



And others agree.  This from the Chinese language press over the weekend - 'China may allow its banks to convert 1T yuan ($150B) of bad loans into equity in the initial phase of the plan (Caixin Weekly)'.

Apple as a value stock: 



And finally...

Would you have thought that China is the country with the highest absolute number of individuals in danger from rising sea levels?  Of course it has a large population too...Bangladesh is still proportionately more at risk:

As noted here 'the folks responsible for the entries in the Associated Press Stylebook have announced that the word “Internet” will no longer be uppercased…'. 

So will you be changing 'Internet' to 'internet' or have you done it already?


Have a good week. 

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