Sunday, 14 August 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:

With the Jackson Hole conference still the thick end of a couple of weeks away, the dog days of August await?  Well with US markets hitting new highs during the last week August has provided an unusually positive backdrop as noted below...

(h/t @LPLResearch) 

...but with the volatility VIX index at 2016 lows investors have been taking the opportunity to build up their volatility insurance exposure.  Interesting times...

(h/t @McClellanOsc) 

...as shown best by the widespread fixed interest outperformance so far this year.  


I am not convinced there is any real value in fixed interest and certainly super compressed yields have an impact - as discussed with relation to a £400 billion pension deficit crisis here

(h/t @OscarWGrut)

Akin to the above is this piece highlighted by @bahamasexile which noted: 

'...the Bank of England's bid to boost the economy has left pensioners with incomes of just £6 a day after a lifetime of saving'

And I have mused before about shifts towards fiscal stimulus...


...and future inflation (at the very least due to higher energy prices than a year ago - let alone if there is any inflationary impact from all the stimulus enacted over recent years) which of course is a very out-of-favour concept currently: 


 More generally amazing what some developed market stimulus can do...
(h/t @Callum_Thomas)

...and even Chinese corporate acquirers have been much overseas centric: 

I highly recommend reading the IMF report (link here) on China published on Friday. Lots of fascinating data including the below on the scope for higher consumption...
 ...and lower savings:

Meanwhile here's a strategically important story.  We'll be hearing much more about SDR debt in renminbi's.  

It appears my anticipation of a higher oil price before the end of the year (US$50+) is historically seasonally contrarian...
(h/t @chigrl)

...but lower production despite a recent uptick in oil rigs is better for global balance: 


Time for some Europe and related analysis.  Yes Brexit is likely to have an impact on the UK economy...

(h/t @IIF)

...but maybe the actual exit from the European Union may be delayed for the UK.  This from The Sunday Times today: 

"Britain might not invoke article 50 until France has voted next May or even until after the German poll in Sept"

Good or bad for 2017 growth?  It probably kicks out the uncertainty a bit longer...interesting though to see as per a report in The Financial Times that directors have turned net sellers: 


Britain’s bosses are selling more shares than they are purchasing in a dramatic swing since the June 23 Brexit vote, when they were active buyers of their own companies’ equities.


In the week following the Brexit vote, directors at large listed UK companies sought their own shares, picking up £14.3bn. But the latest trading data show that FTSE 100 and FTSE 250 directors have taken advantage of the equity rally, disposing of a net £10.5m worth of stocks, say brokers Olivetree.

Talking about uncertainty the need for further assistance to southern Europe is apparent.  At the next ECB meeting in September will Germany have few other options to nod through more stimulus in order - at the very least - to protect their own financial claims?


And finally for the macro selection look at Cardiff go in terms of future anticipated energy needs.  The UK is much more than just London...

(h/t @PatriciaLilyS)



Sector and companies: 

The earnings season is over 90% done but looking at S&P500 earnings they are underlying flat for FY16e...but the usual +1 year mid-teens EPS optimism for 2017...

...that feels like a stock picking world to me. 

Internet search market share is very different in China to the rest of the world...



...and on a related front a fascinating report here on the schisms between China and the US on key internet economy matters: 

In many ways, the split is like 19th century railroads in the United States, when rails of different sizes hindered a train’s ability to go from one place to another.
“The barrier to entering the U.S. or China market is becoming higher and higher,”
(h/t @Jiabaochina)

Meanwhile via an excellent tweet via @TheRudinGroup video on Facebook is rampantly growing: 



Makes you think what market cap a YouTube spin-out might create for Alphabet/Google...

I see the founders of Facebook and Google are both on the list of the richest tech billionaires...



...and talking about technology action, you can see why Wal-Mart bought Jet.com


Turning to UK corporates and the staff turnover at Sports Direct is maybe an insight into the angst (and sharp share price fall) suffered by the company: 



A few other corporate stories in today's Sunday Times

Anglo American pressed to break up £12bn empire...South Africa's Public Investment Corporation (PIC) has begun turning the screw on chief executive Mark Cutifani, and is demanding a shake-up of the FTSE 100 stalwart

KKR...is understood to have held talks with Entertainment One's biggest shareholder, the Canadian pension fund CPPIB, about taking the company private - prior to ITV's offer

BHP Billiton expected £5bn plunge into the red, to be revealded at the annual results on Tuesday, would be the first loss since BHP and Billiton merged in 2001...most of the loss is down to write-downs on the value of its American shale gas and oil division

Casino giant Rank and online gaming outfit 888 are poised to return with a higher offer for William Hill



And finally...

What a cool word cloud £2 coin...

(h/t @cgledhill) 


Have a good week 

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