"And whilst 1.9 percent is hardly breakneck speed, it is important to remember that the EU economy is bigger as a collective than the US economy. So whilst it is driven by (in order), Germany, the United Kingdom, France, Italy and Spain (all economies over the size of 1 billion Euros), all the focus at the moment is on Greece, a country with an economy the same size of that as Portugal"
To market, to market to buy a fat pig. Another score for the resources stocks, underlying commodity prices continue to rise, as does crude oil prices along with this. Not the best news for the global consumer, it turns out that the Saudis have been selling more crude at higher prices, I guess that would indicate strength! Industrials were out of favour, seeing as that is the biggest part of the overall market nowadays, the local exchange closed the session down just over one-tenth of a percent. There was a monster lift for the single commodity stocks, Lonmin, Exxaro, Kumba, Amplats all getting a big lift. In fairness to Exxaro they have multiple businesses, not just iron ore.
Across the seas and a long way away, the going was really tough. Tech stocks were particularly beaten up, telecoms and utilities also bore the brunt of the sellers. Session end the broader market S&P 500 had sold off nearly one and one fifth of a percent. The nerds of NASDAQ sank below 5000 points and clocked out down one and a half percent plus. The blue chip index, the Dow Jones Industrial Average, closed down nearly four fifths of a percent. What spooked markets? Was it this? Service Industries in U.S. Unexpectedly Expand at Faster Pace You know, good news is bad news. Perhaps this, although it is seasonal: US trade gap widens on demand for cars and mobile phones. Yes, in fact the same publication (the FT) suggests as much: US trade data unsettle stocks and dollar.
Time to translate, GDP data (which the first read already suggested a very weak 0.2 percent for Q1) should be revised downwards with this weaker trade data. GDP = private consumption + gross investment + government investment + government spending + (exports - imports). That last part, exports minus imports. Imports were far greater as a result of a strike at the port in LA being finished and having to account for a backlog, as well as pent up demand. Ah well, swings and roundabouts. The economy is not the market, the market is not the economy, corporate earnings are more important than anything else.
We are starting to see more and more of these headlines, this one is from the NYT: Europe's Economic Growth Forecast Is Revised Up. Nice. Spanish unemployment was once a problem, it is now contracting at a faster pace than at any other time since the country was in the Euro zone. Admittedly off a much lower base. And whilst 1.9 percent is hardly breakneck speed, it is important to remember that the EU economy is bigger as a collective than the US economy. So whilst it is driven by (in order), Germany, the United Kingdom, France, Italy and Spain (all economies over the size of 1 billion Euros), all the focus at the moment is on Greece, a country with an economy the same size of that as Portugal. My only point is that whilst the Greeks and the rest of Europe stumbles and fumbles about, if the entire Greek economy falls in a hole, the rest of Europe will grow it back.
Company corner
It is not anything that I have ever used, the e-wallet, I know that FNB offers it. I saw an FT article that suggested that Visa expands UK mobile payments service, having formed partnerships with Topshop and the like. The whole idea that we are converging towards a cashless society is happening quicker than I thought. Use big online banking systems for the big secure payments, the consumer payments will still be done by Visa, eliminate cash with mobile wallets. We still all need to adopt the technology and most importantly need to all have better smartphones.
There is something brewing in the iron ore production market in Australia, with no love lost between Fortescue and BHP Billiton and Rio Tinto. So when I read this story, I had to have a double take: BHP Billiton iron ore boss Jimmy Wilson slams Fortescue Metals in memo to staff. The background is that the bigger iron ore producers, Rio and BHP have driven costs sharply lower with improved technology and scale.
Fortescue chairman Andrew "Twiggy" Forrest is suggesting that the two Aussie majors are trying to drive down the price of iron ore with increased production, thereby squeezing himself and the rest of the marginal mid tier companies globally. This article holds no punches: Andrew Forrest and Ivan Glasenberg team up on iron ore. The opening line from the article by Joe Aston possibly has it spot on, with emphasis on the last sentence: For any of our readers who have just woken from a long coma, Fortescue Metals chairman Andrew Forrest is on the warpath, and his big targets are his big rivals, BHP Billiton and (especially) Rio Tinto. Situation normal really - so get some more sleep and we'll wake you for the next mining boom...
Lower prices are hardly good for the producers, majorly good for the steel producers. All we need now is more to build, Chinese manufacturing still looks sloppy. Can the Indian giant awake? I am guessing that if the IPL quadrupled, the number of spectators would be there. IPL, on my bucket list.
This is pretty interesting, the headline tells you all you need to know: Richemont Puts the Smarts Into the Strap Rather Than the Watch. My simple analysis of the smartphone market, relative to the timepiece market is that the one is a tool and the other is a piece of fine human engineering. Not that the Apple Watch is not a fine piece of engineering, it most certainly is, it is a tool. In my mind. With the renew cycle of Apple, you are likely to end up with multiple Watches over the decades, timepieces however are passed down from generation to generation and carry the same memories along the way.
Things that we are reading
This is pretty interesting and another reason why you should always be provisioning for retirement. Via the Time Business blog -> 61% of Americans expect to continue working past the age of 65, comes the news that Americans are basically not planning to retire. The whole idea of kicking your feet up and remaining footloose and face free is perhaps a concept that only past generations enjoyed with more frequency. We are living longer. We are living better, healthier. We want more. Therefore we are going to have to work for it. See the detailed research: American Workers Are Changing the U.S. Retirement Landscape.
We all know that the average American works long and tiring hours, we like to think that all of us work the hardest and smartest. The BusinessInsider, the greatest of the aggregators, had this story which was pretty enlightening: The 40-hour workweek is on its way out. 61 percent of Mexican managers work more than 40 hours a week, followed closely by Americans at 58 percent, what was pretty enlightening is that only 19 percent of their Chinese counterparts worked over 40 hours a week. Perceptions sometimes are not reality, I immediately thought that Chinese managers would put in more hours than any other nation. No, not true.
I really like the way that Cullen Roche explains the link (or lack thereof) between Quantitative Easing and inflation. You do not need any economics background to understand the logic at work here, Roche points out that after 7 years the arguments of many famous economists were flawed and in reality the inability of people to borrow as a result of their flawed creditworthiness (relative to where it was), has not created a big jump in money supply. Read this carefully and slowly, this subject, in terms of all the reading that I have done, has best been covered by this chap. Here goes: No, The Inflation From QE is not Inevitable.
Home again, home again, jiggety-jog. Stocks are lower, following on from Wall Street. We have started the day down by just over half a percent. On the radar today is ADP, that is the precursor to the big jobs number on Friday. Perhaps a chance of breathing room for Dollar weakness.
Sent to you by the Vestacters, Sasha, Michael, Byron and Paul.
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