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03-12-2016, 08:10 PM
#141
One by one, underestimated stocks markets and currencies are bouncing back. Over estimated stock markets and currencies are having rough time. Many were bullish on YEN and bearish on Pound. Suddenly, pound became a bullish and Yen became a bearish.
https://www.bloomberg.com/news/artic...o-got-it-right
Yen at 120 Lonely Call No More for Analyst Who Got It Right
https://www.poundsterlinglive.com/gb...nd-santa-rally
British Pound’s Santa Rally Forecast to Extend Beyond Christmas
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03-12-2016, 11:22 PM
#142
This referendum in Italy right now could create havoc in mkts.Its the 8 th biggest economy and politically, structurally what a mess; changes Govt about once a year and its set up so the Govt can't enact anything anyway. A small excerpt from Maudlam Economics newsletter(Google it; its free)
Extend & Pretend, Italian-Style
I’ll cut to my conclusion: There is a high degree of probability (approaching 90%, I’d say) that Italy will experience a severe banking crisis in the next few quarters. Perhaps they can stave off the problem for a year, but something will have to be done about the banks. We’ll go into that later in the letter, since the plight of the banking system is the root cause of all the country’s other problems. Without a banking crisis, Italy would still be the political mess it has been for 65 years, but the banking mess turns the political mess into an economic mess.
An Ungovernable Mess
All these issues are part and parcel of Italy’s political dysfunction. Economic weakness flows out of a sclerotic, multi-layered government that finds it very easy to spend money and very hard to do anything else. The result is a bureaucracy that stifles commerce and massive government debt that retards economic growth. Weak, chaotic governance is a prime reason Italy has such high unemployment. Bailing out the banks will add to the debt – but the alternatives to saving them may be even worse.
Italy’s debt problem is not recent. When the Italians joined the euro they were able to enjoy low interest rates at both the national and personal level, so they ran up their debts. The problem is that the country can no longer devalue its way out of the problem. It is running a massive, and I mean truly massive, trade deficit with Germany and the rest of Europe.
And bank deposits and capital are simply flying out of Italy as we speak. We measure this by something called TARGET2 balances. Essentially, Italy’s TARGET2 balance is the money leaving Italy and going to other countries within the euro system. I should note that the chart below depicts the latest data but does not include the whisper numbers we are hearing that would make the chart look even worse. Remember, the US elections and the other political upsets have happened since the ECB published this chart in September. And the euro is falling out of bed.There is a significant chance Italy will decide to leave the Eurozone and/or the European Union in the next year or so. Is it likely? No, but we’ve seen less likely things happen recently. Just the discussion of the possibility could be destabilizing to markets that already have enough worries.
If we are lucky, Italy will decide quickly what to do and then do it in a planned, orderly fashion. That would, however, go against everything we know about Italy from experience.
So what is this weekend’s referendum supposedly about? Matteo Renzi, the prime minister, seeks to overhaul Italy’s political system with constitutional reforms. Presently, the national government has a bicameral parliament. Unlike in other countries, Italy’s two chambers are co-equal, and very little can happen unless they agree – which is apparently rare. This setup lets the bureaucracy run wild.
Renzi’s reform plan would reduce the senate from 315 elected members to 95 who would be chosen by regional assemblies and mayors, and five more senators who would be appointed by the president. The senate would lose most of its ability to block bills. The plan would also pull back certain powers the national government had given to some regions. The current system practically guarantees that no serious reforms can be passed, and Renzi is gambling his political future on changing that system.
When I was last in Italy, Renzi had been in power for just a few months. I and a friend met with their central bank and some of the politicians in Renzi’s leadership. They were all absolutely convinced that Renzi would be able to reform Italy. These were true believers.
Renzi correctly concluded that without the reforms Italy would be ungovernable, so he called for the referendum at what he thought was a propitious time – but then postponed it to the point where it now looks as though success may have slipped out of reach.
Separately, Renzi already pushed through another set of electoral reforms called the Italicum. It is complex, but the important feature of it is that it will enable a party that gets less than a majority of votes, and possibly a lot less, to get bonus seats in parliament and end up with firm control. Party leaders will have tremendous power under this system. Note that this measure was pushed through with the consent of both of the leading center-right and center-left parties in an effort to make sure that the growing minority parties couldn’t band together and form a government. Oops. It is now no longer certain that one of those “minority” parties (like the Five-Star Movement) wouldn’t be the leading vote getter. Certainly, such a party wouldn’t win a majority of votes, but it might succeed in fracturing the Italian political system even further."
Maudlam Economics newsletter (free)
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05-12-2016, 08:37 AM
#143
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05-12-2016, 02:40 PM
#144
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05-12-2016, 07:14 PM
#145
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21-01-2017, 01:05 PM
#146
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12-02-2017, 12:02 PM
#147
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18-02-2017, 07:21 PM
#148
It may be time to separate attractive individual sectors and stocks from the broader market. It may be also time to look for overlooked markets having attractive valuations.
Still Consumer staples should become one of the bullish sectors in global markets in 2017. We could see Merge and acquisitions as well. Following the move by Reckitt Benckiser to buy baby-food producer Mead Johnson Nutrition, we can see the second M & A deal now. US food giant Kraft Heinz initiated take over bid for consumer staples giant Unilever. Latter has rejected the bid.
Sectors to watch
Infrastructure, Financials, internet and consumer staples
Frontier markets to watch
Sri-Lanka, Bangladesh and Egypt
Emerging markets to watch (selected few attractive sectors)
China, India, Indonesia, Russia, South Africa and Brazil
Last edited by Valuegrowth; 23-04-2017 at 08:16 PM.
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08-04-2017, 09:17 AM
#149
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22-04-2017, 05:02 PM
#150
Can the snap general election be a “game-changer” for both the UK's Brexit negotiations and sterling? I think so. The pound surged to a six-month high last week after announcement of a general election on June 8th.
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