Sunday, 4 December 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 mildly negative last week...


(and for a really good review of last week - with some great charts - check out @KurterOzde's summary here). 

A focus on Europe today...


...and whilst we await the results of the Italian referendum later (surely a 'no' will prevail)...


...in Austria the Green Party candidate beat the Far Right challenger for the more ceremonial position of the country's President.  The first reversal for a more populist candidate in a while (again indicating Europe is not 'over'): 


At least he admitted defeat in a suitably nationalistic upbeat manner.  


Come on Europe! 

Who said everything was downbeat! 

 

 Fewer however believe it is essential to live in a democracy.  Hmm.

Reflective of more generally nationalist politics?  Certainly a shame in my view that the Trans Atlantic TPP including the US is not going ahead...

...following the election of Donald Trump.  Did you see what he wrote earlier on Twitter?

The U.S. is going to substantialy reduce taxes and regulations on businesses, but any business that leaves our country for another country...

fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S....

without retribution or consequence, is WRONG! There will be a tax on our soon to be strong border of 35% for these companies ......

Protectionist?  Nationalistic?  Or Realistic?  

On a similar front, I was amused by this from Barrons:

(h/t @BarbarianCapital)

But - and this could well be the sticking point - purchasing power parity measure show EM currencies are very cheap.  That means the dollar is strong (another reason i believe that Trump should weaken the dollar): 

And as I noted on Twitter: 

Scary chart. Can you imagine the risk rockets going off if the does do a shift akin to the Plaza Accord? the big call for '17 IMO


Meanwhile when I look at this front page of The Economist it makes me think that such a weaker dollar call is spot-on: 


So what awaits?  A couple of great charts from @Callum_Thomas on current market sentiment.  Equities slowly coming back more into fashion (i would agree with this - give me a selection of equities anytime at the moment):

But don't get too excited about IPOs.  Pick and choose established listed equities.  


What it tells me is that you have to be like Keynes in his second investment period.  When the world gets weirder get more fundamental: 
(h/t @PlanMaestro)

A couple of final charts on Asia.  Shenzhen-HK starts tomorrow...and look what happened with a lag to Shanghai-HK a couple of years ago.

Meanwhile you know all those worries about Chinese debt some have?  A nice piece here (h/t @jiabaochina) about the importance of thinking about assets and the opportunities from growth too. 

The complex world of Indian currency flows.  You can see why the Indian government wanted to 'evolve' those high denomination notes.  


Sector and companies: 

This is going to be a focus of the post-referendum Italy at a stock level.  More consolidation anticipated.
What chances of seeing some time soon a period akin to 2003-5 when earnings get upgraded versus annual hopes anticipated at 1 January?


As I observed on Twitter: 

Very interesting re 'got to stay active' versus 'active through buying a passive index' debate. For me the fun and experience in the former


A couple of company observations:

"RBS could be hit with a fine of up to £12bn for its role in American sub-prime mortgage meltdown". Peak panic, shares already bottomed IMO

Yes, they did apparently.  Both shares I own but they should not be together from a Burberry perspective IMO.  Going to be interesting to watch the UK luxury name tomorrow: 

Burberry, the UK’s biggest luxury goods retailer, rejected multiple takeover overtures from US fashion accessories group Coach in recent months, according to people briefed on the matter.
A deal would have created a group with a market value above $20bn, bringing together the US company’s leather goods, handbags and shoemaker Stuart Weitzman with Burberry’s trademark luxury outerwear and global retail footprint.
And in Continental Europe this was in the Sunday Times.  More consolidation apace.

Two of Spain’s largest banks are vying to swallow up embattled rival Banco Popular. Santander and BBVA are in talks with bosses of the sixth-largest bank in Spain over a €3.8bn (£3.1bn) takeover, according to sources in Madrid. Popular’s shareholders last week ousted its long-serving chairman Angel Ron. They blamed him for failing to clean up the bank’s balance sheet, issuing a slew of profit warnings and for presiding over an 80% collapse in the share price.

And whatever you do in your investing / trading this week...try to avoid equivalents of this! 

Have a good week 

Friday, 2 December 2016

Free webinar Thursday 8th December - new macro thoughts / best stock picks

Yes, it is time once again for the monthly Financial Orbit webinar being hosted on Thursday 8th December at 3pm London time (10am ET).  During this webinar I will review:


  • The latest macro trends to help you understand the world we live in.  This will include an appraisal of two HUGE financial events in Europe that week in the form of the Italian referendum and the European Central Bank meeting.  This builds on the successful recent webinar I undertook on the Donald Trump Presidency which you can access here;

  • Analysis of which sectors and stocks to be buying in the global large cap universe based on my preferred list real time portfolio...don't forget these portfolios have delivered in the first nine months of 2016 some attractive returns and great realised ideas profits as detailed below:


A few 2016 realised winners

Randgold Resources +55.4%, Umicore 46.1%, Aggreko +37.9%, Royal Dutch Shell 35.2%, Hershey +27.7%, Jardine Matheson +24.5%, GlaxoSmithKline 21.4%, Apple +18.8%, BASF +15.3%, Yum! Brands +14.6%, Phillip Morris Intl +12.8%, AIA +12.5%


  • An opportunity to ask me the investment questions that are worrying you via our interactive webinar format



  • If you would like to have the opportunity to participate on Thursday 8th December click here or send me an email to chris.bailey@financialorbit.com to reserve a space.  

"Sugar rush: eating cake, Brexit and excitable stock markets"

I am really pleased to have started writing a regular column for Yahoo UK/Ireland on finance and the investment markets.  You can find here my latest column titled:

Sugar rush: eating cake, Brexit and 

excitable stock markets




My latest appearance on the Vox Markets podcast

I appeared again on the Vox Markets podcast.  You can listen here to my latest appearance where I talked about...

Chris covers: . &

Sunday, 27 November 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:

It may have been a Thanksgiving shortened week but there was a lot of green in global market moves...


...and the Bloomberg measure of world market cap is once again near all-time highs: 


A point reinforced by the general proximity of many markets in their current 'YTD' performance positioning with their 2016 peak: 


Still in a seasonally strong period of the year...


...however bonds have performed remarkably well over the last couple of generations.  
Look at that relative lack of drawdown years versus other asset classes (as an aside - wow, look at gold).  I think the biggest challenge for bonds going forward is going to be a lack of total returns going forward.  



And what bond markets have performed the worst YTD? Step forward Italy...well at least you can say that something is factored into next Sunday's vote:


(saying this I note that the Financial Times is running a story in its online edition noting:

 'Up to eight of Italy’s troubled banks risk failing if prime minister Matteo Renzi loses a constitutional referendum next weekend and ensuing market turbulence deters investors from recapitalising them, officials and senior bankers say'

That feels a bit too pessimistic...

Anyhow from an asset allocation perspective I still clearly prefer an active selection of equities versus bonds.

And talking about equities is 'value' breaking out?  Of course value as currently described consists of a bunch of out-of-favour sectors including financials and commodity-facing ones:


What could throw a spanner into the works of the global economy?  I still worry about the strength of the US dollar and its impact on the emerging economies (and general risk profile of markets).  

I believe a weaker dollar would also help President Trump and his campaign promises to create jobs.  Otherwise I do fear a Protectionist-lurch and - as observed below - the US is not exactly coy about such matters...

And look how important the steel industry is to protectionist measures...


(for both the above charts see more here)

Inequality of income of course has been a driver behind political populism...


I took a couple of commodity charts from @KurterOzde's excellent weekly macro review which can be seen here

You know my view on the oil price...I think it is going up and anticipate US$60+ next year.  That's towards the upper end of general hopes: 


And many ways to interpret this gold/dollar chart.  Of course there is shorter-term negative correlation BUT I observe that the gold price is much higher this time at 100+ on the dollar trade weighted index than before.  Building a base...

  
How was Black Friday for you?  This report suggests less money was spent:

Shoppers spent an average of $289.19 over the four-day weekend, including both online and offline purchases, the National Retail Federation said on Sunday, citing a survey conducted by Prosper Insights & Analytics. Consumers shelled out $299.60 in 2015, the trade group found.

Additionally I noticed all this fascinating information - and some clear online trends - via @BrianSozzi:

How people shopped this Online: 108.5 million In Stores: 99.1 million

More than 154 million consumers will shop over Thanksgiving weekend, up from 151 million shoppers last year


And on a similar front here are the big players in online apparel retailers...


Sector and companies: 


Netflix leads the US in something...

A couple of fascinating charts from the Korean auto company Hyundai on geographic balance of itself and peers...


...as well as the profitability of its peer group.  Tough market autos...Hyundai claim a sector leading position despite five years of declining margins...


Meanwhile in the UK market I saw this on National Grid in the Financial Times:

Ministers have backed away from threats to break up National Grid, the FTSE 100 power group, which instead will be ordered to put in place stricter Chinese walls to prevent conflicts of interest in its role operating Britain’s electricity system.
New independent directors will be appointed to a separate board overseeing system operations under a compromise deal to be announced in coming weeks, according to officials briefed on the matter.


Have a good week 

Friday, 25 November 2016

"The UK economy is ok as we’re going on holiday and eating pizza…"

I am really pleased to have started writing a regular column for Yahoo UK/Ireland on finance and the investment markets.  You can find here my latest column titled:

The UK economy is ok as we’re going on holiday and eating pizza…




My latest appearance on the Vox Markets Podcast

I appeared again on the Vox Markets podcast.  You can listen here to my latest appearance where I talked about...

Chris Bailey covers: Thomas Cook #HSS Hire and Randgold Resources >