Sunday, 15 May 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:

A mixed week on global markets...

(souced from here)

...and still plenty of fear around which is why you get stories like this:

'Losses will be directed to insurance companies, pension funds and private investors – bailing them out may prove to be politically necessary (link here)'

(and the rationale for this?  Well... 'Where rating downgrades or deteriorating credit quality result in falls in the value of sovereign securities, banks suffer losses on their holdings...')

You also get low sentiment measures like this...

(h/t @mktoutperform)

...or retail positioning like this...

...and redemption flows like this: 

Well key markets like the US are not exactly cheap on a historic basis...

...and index of course which a reasonable global guide: 

(h/t @ukarlewitz) 

Adding to such fears is a slowdown in China on which there was some data out over the weekend: 
'Industrial production climbed 6 percent in April from a year earlier, down from 6.8 percent in March and missing economists’ estimates for 6.5 percent. Retail sales also missed analyst forecasts, rising 10.1 percent, while fixed-asset investment increased 10.5 percent in the January-April period versus economists’ expectation for 11 percent'.  Great report here with some fascinating graphics. 

Personally I still see good growth and opportunity around China admittedly with issues and a difficult transitional shift to pull off.  I was pleased to see this report over the weekend:

'China is asking Britain for advice to create a financial super-regulator, sources told Reuters, signaling Beijing's growing willingness to seek outside help for improving oversight of its financial infrastructure'

Of course you get opportunities in times of great uncertainty which would be my broad view of where we are currently investments-wise: there are things to be doing.  Of course not everywhere and in everything. As a report I liked this on the Greek economy...even if the numbers remain very grisly

How do you feel about oil?  From a supply side perspective global rig count being at levels not seen since the year 2000 has got to be interesting...

...but the real key has to be watching the key new big marginal supplier at the margin the United States and so far their lack of response to the higher oil price of the last three months or so: 

Nice read on robots but I think the key line (as with many other innovations) is that 'Robots won’t just take jobs they’ll create them'. Link here.

Fascinating geopolitical chart

(h/t @ianbremmer)

Fascinating on the professions of those caught up in the Panama Papers: 

(h/t @Jaana Remes)

Sector and companies: 

In an interview I gave earlier this week (link here) I talked about the power of compounding and dividends and this was wonderfully put together in this chart:

(h/t @conkers3)

Apple shares were jousting with Alphabet (aka Google) re which one is the world's highest market cap company during the last week.  On the former - whose shares have fallen back recently - I thought this was worthy:

'The fundamental problem with the current iPhone 7 rumors is that they've gotten pretty stale. Without a current refresh, I'm not persuaded that they offer much guidance to the real iPhone 7. The lack of fresh data suggests that Apple has successfully clamped down on the leaks that plagued the iPhone 6 launch...This is probably a good thing for Apple, but it does leave us investors wondering what to expect (link here)'

Did you see that Warren Buffett may be considering an approach (as part of a consortium) for Yahoo?  Nice summary rationale here: “It’s kind of consistent with Buffett’s pattern of buying things that are out of favor, undervalued and have a big customer base,” he says. “The paradox is Yahoo's huge, it remains huge, and it's got a lot of customers. It's not the case customers are fleeing them right and left, it's just that no one can get a good pattern of growth." (link here).

Talking about US companies a big week earnings-wise for the retail sector upcoming.  This graphic highlights some of the challenges and issues:

A few companies stories from today's Sunday Times:

'Luxury goods giant Burberry will reveal a sharp fall in annual profits this week due to spending curbs by Chinese consumers' 

'The £2.2bn merger of Ladbrokes and Gala Coral is hanging in the balance as the competition watchdog prepares to force the sale of hundreds of betting shops' 

The Thomas Cook CEO does not rule out the company being a M&A target: 'obviously we are an attractive partner.  But I am happy with it how it is' 

And finally...

Quiz: Which Invincible are you? An essential quiz for any Arsenal fan (link here). 

Have a good week - and don't forget to check out the last week on Financial Orbit here

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