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WCU: Global trade tensions taking their toll – #SaxoStrats

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Global trade tensions helped trigger a broad-based retreat across key commodities. The risk of an escalating tit-for-tat trade war could hurt global growth forecasts and with that the outlook for demand of raw materials. Industrial metals slumped to a 12-week low oil was lower due to rising supply while profit taking hit key crops following recent weather surge. [Read More...]

What will drive markets in 2020?

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The first theme in our 2020 Global outlook, Growth edges up, heralds a modest pickup in global growth. This provides a decent tailwind to Canadian economic activity after a year of steadily slowing global growth. Our BlackRock Growth GPS for Canada rose throughout the second half of 2019, even as growth weakened elsewhere, and indicates consensus estimates for Canadian economic activity may be too dour. A cheap currency boosted exports at a time when geopolitical uncertainty weighed on business investment and indebted households showed some signs of fatigue. We think Canadian growth can remain steady next year, especially if industrial production and manufacturing have reached a bottom and trend higher. Our second theme, Policy pause, calls for economic fundamentals to drive global markets, rather than monetary surprises or fiscal … [Read More...]

Charlie Munger on Country Risk and Twaddle of being a Capital Allocator

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Most of the questions have already been answered, hence ‘I have nothing to add’Reasoning behind the PetroChina investment? PetroChina is not opaque. It’s very similar to big oil companies elsewhere in the world. It’s the 4th most profitable oil company in the world – it produces as much crude as Exxon. It’s not complicated – it’s a big integrated oil company, so it’s fairly easy to get your mind around the economics of the business. The annual report will tell you more about the business than [the annual reports of] other oil giants. They tell you they’ll pay out 45% of their earnings, barring the unexpected. I like knowing that that cash will come to Berkshire. It was bought because it was very, very cheap by any … [Read More...]

Crude Oil To Chemicals Transition And Aramco’s Plans

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Crude oil and Petrochemicals are the building blocks that are essential to making the goods that make modern life possible — from paints to plastics, space suits to solar panels, medicines to mobile phones. All of these things start with just six basic petrochemicals — ethylene, propylene, butylenes, benzene, toluene, xylenes — that are combined […] The post Crude Oil To Chemicals Transition And Aramco's Plans appeared first on INO.com Trader's Blog. [Read More...]

Growth Is Becoming More Valuable

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Precious gems, Old Masters artwork and certain brands of scotch: scarcity makes them more desirable and adds to their value. The same can be said of organic growth. As the economic cycle matures, we expect the stocks of companies that have it—and can maintain it—to become increasingly prized. [Read More...]

When FMCG gang behaved like Cyclicals

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This is the world’s 8th most populous country and largest of the 50 economies of Africa.None of the three cited Consumer companies are growing revenues, Unilever, GSK, Cadbury (except Nestle with stagnant numbers)Revenues and profits of all companies have shrunk this year. Thats Boko Haram and Oil Price drop for Nigerian investors. I feel that Nestle is over owned. Cadbury experienced sharpest revenue and profit drop. Loved the massive buyback of Cadbury Nigeria in 2014 reducing outstanding shares by a whopping 40% despite huge opposition. GSK needs to up its game before the licence with Suntory runs out to market Ribena and Lucozade. Yet to pull trigger on GSK, own other two. Wrote earlier about GSK herehttp://www.mynewswatchtimesng.com/cadbury-achieves-share-capital-reduction-amidst-opposition/http://… [Read More...]

Why Eurozone stocks have lagged

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Since the low point for the equity markets during the global financial crisis in 2009, Eurozone equities have lagged their US counterparts by an impressive 300%. Why is this? By the look of things, it’s a combination of different factors. The first – and most important – reason is that US companies have performed much better than their European counterparts when it comes to corporate earnings. The graph below shows that since March 2009, the earnings per share of companies in the S&P 500 have increased 170%, compared with an increase in earnings of precisely 0% for companies in the Eurostoxx 50. Some of this difference can be explained by share buybacks, but for the most part it can simply be put down to profitability. Heavyweights The second reason is … [Read More...]

What Would A New President Mean to E-mini S&P 500 Futures

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In many ways, 2019 turned out to be a historic year for both politics and S&P 500 futures. US stocks rallied to unprecedented heights and, for only the third time in history, the US House of Representatives impeached a US president. E-mini S&P 500 Futures Drive Higher On December 18, 2019, the US House of Representatives voted in favor of impeaching Donald J. Trump on two separate articles. Although broad in scope, the charges put forth formally outlined obstruction of justice and abuse of power. Each was upheld by the House of Representatives, which voted 230-197 and 229-198 “in favor of” each charge, respectively. As a general rule, political uncertainty leads to market turmoil. Heavy volatility frequently develops during elections or an unplanned regime change, with buyers and sellers interpreting the … [Read More...]

30% CAGR, 30% ROE, Debt Free, 10 PE, Monopoly or Near-Monopoly

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There was a lot of above stuff few years back and may yet be available again dear to every greedy and/or miser investors heart, as described in subject line. I was in India and recently tuned into CNBC TV 18 after ~5 years for few days. I heard only one sensible thing on this channel. It came from Sanjoy Bhattacharya, “In my life, albiet short in itself, I have never seen an Auto Component Manufacturer at 80+ times earnings – BOSCH India, so there is something wrong.”I also had joint pain and to fix that I read ~half a dozen books last month. I came to the conclusion that best of the best doctor in any corner of the earth knows much less than 0.0001% of mechanics … [Read More...]

Is the ‘great rotation’ upon us?

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Stock markets have been fairly quiet in recent days, moving higher most of the time. But underneath, a spectacular rotation has been going on. Value stocks – which have lagged growth stocks for almost 15 years (see also the chart below) – have beaten growth stocks by a wide margin. But is this a signal that the ‘great rotation’ has begun? Value outperforms growth Despite having underperformed in the past decade and a half, value stocks have outperformed growth stocks since 1975. A key explanation for this long-term trend is that investors tend to be overly negative about dull, slow-growing value stocks and are generally too enthusiastic about growth stocks, which seem to offer limitless potential. This extrapolation of future expectations has to be adjusted at some… [Read More...]

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