The Stock Market Most at Risk from Lower Oil Prices...

The Stock Market Most at Risk from Lower Oil Prices... By Filipe R Costa Back in 2014, and mostly due to the slump in oil prices, Russia fell into a downward spiral that saw the value of its currency slashed and its economy enter a recession. Almost two years later, the currency and the stock market market have recovered, but the economy is still underwater, with GDP declining for five straight quarters. While the economy recorded a better performance than many were anticipating, it may yet see its full recovery postponed by further oil price weakness. With VanEck Vectors Russia ETF up 21.6% year-to-date, it may be time to take profits, as pressure on oil prices is mounting and will weigh negatively on Russian equities. Russian equities have in fact done very well so far this year, in particular when compared with the MSCI World index, which is registering a tiny 2.3% gain. While the developed world is split between small gains and small losses, some emerging markets, like Russia and Brazil, managed to recover at a very fast pace. With commodity prices recovering, in particular since mid-January, investors anticipated the economic gains and pushed equities higher in those countries. But, at a time when commodities are losing some of their previous momentum, investors may revert to real indicators and re-evaluate their holdings. While commodity prices are now higher than at the beginning of the year, economic data in Russia is still ugly, with five straight quarter of negative GDP growth. The question to ask at this point is: Is the 21% profit from the broad equity market reflecting economic prospects? I believe it is not... Click Here To Read The Full Story The Master Investor Market Report The FTSE 100 closed the day at 6,724.43, an increase of 3.37 points. The FTSE 250 rose 30.55 points to finish at 17,282.88. The FTSE All Share climbed 2.70 points to finish at 3,653.83. The FTSE AIM All Share finished at 756.16, up by 1.97 points. Financial giant Barclays (BARC) saw its shares climb 5.49% to 154.55p despite its profits before tax dropping 21% to £2.06 billion during the first half of the year following the sale of some non-core activities. The remaining non-core businesses lost £1.9 billion over the period. Full-year guidance remains unchanged as the company looks to continue cutting costs during the next six months and performance in the core areas of the firm is expected to pick up.     Download our July issue today! Click HERE to read. London-focused property group Foxtons (FOXT) saw its pre-tax profits for the six months ended 30th June plunge by 41.9% to 10.5 million as trading in the capital slowed during the lead up to the EU referendum. Management warned that, following the vote, they do not expect sales levels to fully recover until the beginning of next year. Revenues for the half year fell to £68.8 million despite a very strong first quarter that benefited from a rush of deals ahead of a change in stamp duty. The shares dropped by 14p to 110p. FTSE 250 pharmaceutical outfit Indivior (INDV) has reported that net revenues for the six months ended 30th June rose to $531 million (£265.2 million) as it increased its market share in the US. However, operating profits also dropped to $198 million (£149.6 million) as a result of planned higher expenditures. Full-year sales forecasts have been increased to $1.03 billion (£0.78 billion), assuming that current conditions remain in place. The shares climbed 9.8% to 296.10p. Monday's news today Ultra Electronics (ULE) and Intertek (ITRK) will release interim results. Quote of the day "We succeed in enterprises which demand the positive qualities we possess, but we excel in those which can also make use of our defects." - Alexis de Tocqueville Latest Stories Something for the Weekend – Cracks in the DAX? By Adrian Kempton-Cumber Whether or not you have kids yourself, you almost certainly were one once. Birthday parties were something I looked forward to. You'd have your besties over on yours and hopefully they'd invite you to theirs… Click Here To Read The Full Story Chart Of The Day: Barclays By Zak Mir It may be unfair to suggest that the banking sector is effectively a long-term sell, but this does at least explain much of the recent past in terms of the fundamentals, and of course the big bailouts… Click Here To Read The Full Story GKN Is Geared for Growth By Robert Sutherland Smith GKN at 290p have pulled back a little on the half-year results. If they were to move down towards 260p again they would be attractive on an estimated dividend yield of 3.6 per cent… Click Here To Read The Full Story The Evil Diaries: "All in all, it's a fair bet" By Evil Knievil Clearly, the market's view is that William Hill (WMH) is not going out at 360p. This has enabled me to buy 35,000 at 314p this morning. There must be monopoly enquiry fears if a bidder steps up to the plate and where it is already deeply involved in the British betting business… Click Here To Read The Full Story Chart of The Day: AstraZeneca By Zak Mir The US Dollar may have pulled back slightly after the latest FOMC meeting, but Dollar earners such as AstraZeneca seem to be rising whatever the greenback does... Click Here To Read The Full Story Join the movement on social media: Copyright 2016 Master Investor Ltd, All rights reserved. You are receiving this email because you opted in at our website. If a Daily Bulletin is too frequent, why not opt in to our once weekly mailing list for a round up of the week's news straight to your inbox. Once Weekly Round-Up Our mailing address is: Suite 88, 22 Notting Hill Gate, London W11 3JE Master Investor is a trading name of Master Investor Limited. Material contained within Master Investor Magazine and its website is for general information purposes only and is not intended to be relied upon by individual readers in making (or refraining from making) any specific investment decisions. Master Investor Ltd does not accept any liability for any losses suffered by any user as a result of any such decision.

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BOJ quick note by Kay Van Petersen in Singapore - a good read

Great note by Kay – I agree.. the main point is BOJ actually acknowledging the need and demand for US Dollar funding. BOJ leads again….in policy terms…

We continue to monitor USD basis swap funding and clearly Japan was VERY BID US Dollar funding going into to this meeting…

 

Steen

 

 

BoJ Statement, Press conf. at 15:30 Tokyo Time (14:30 SG/HK)

 

·        See attached BoJ statement

·        Key new takeaway is that the BoJ is acknowledging USD funding liquidity measures that are being felt globally

o   Doubles US dollar loan facility for JP companies to $24bn for 4yrs (this correlates with what Steen has been saying about increased USD funding crisis)

(Concerned about JP exports no doubt)

·        On the rest of the statement, it's a quite weak vs. expectations. I am surprised DollarYen is still holding up above 103, we should easily be sub 102 & on the way to test 100

·        Policy rate & money market operations are unchanged, i.e. still at -10bp, bond purchases unchanged, no new maturities launched, etc.

·        Exception is doubling of equity ETF purchases

·        Overall the BoJ seems to be acknowledging (in between the lines) the limits of monetary policy

·        BoJ press conference is at 15:30 Tokyo time

·        This leaves even more heavy lifting for the fiscal side, whereby we could be getting a final announcement next week – but nothing confirmed.   

 

1Yr Yen Basis Swap

 

Last USDJPY at 103.13, H/L for the day so far 105.27 /102.71

 

 

 

-KVP

(Note that these are solely the views & opinions of KVP/sender of this email & do not constitute any trade or investment recommendations.)

 

Open Trade Views

Live Tactical Trading Views (Think near-term, noise, technical-momentum type trades)

No current tactical trading views

Live Strategic Trading Views (Think medium-long term, old school macro, more fundamentals type of trades)

Mon, Jan 25: High conviction multi-year call on being long gold & especially the gold & silver miners: GDX, GDXJ, SLV, Gold futures, Gold spot

Thu, Feb 25: +100% price target to $40 on GDX (gold miners etf) entry $19.11, Stop $12.30, Tgt $40

Mon, Mar 21: Long vol strategies, with a Saxostrats on long OTM 20 strike Sep expiry VIX calls

 

(Note that these are solely the views & opinions of KVP/sender of this email & do not constitute any trade or investment recommendations.)

Best regards

Kay Van-Petersen | Global Macro Strategist 

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What Would a Trump Victory Mean for Investors?

What Would a Trump Victory Mean for Investors? By Victor Hill Letter to my American friends. The Donald will reach an accommodation with Russia. The alternative could be too awful to contemplate. This thought has momentous importance for investors – and indeed anyone who cares about the future. Now I know many readers may not like Donald Trump, and that he has offended people – women, Mexicans, Muslims, minorities of all kinds. And I admit that his programme, as sketched out in his acceptance of the Republican Party nomination in Cleveland on 21 July, was short on detail. (British understatement…) But there is one consistent theme of his campaign and of his thinking which I believe has been under-analysed in the media. Mr Trump is concerned that the USA has made an enemy of Russia at a time when we would benefit from their cooperation. Just as he realises that the political elites who control the West have become disconnected from the people that they are supposed to represent, he has also understood that the entire states system constructed after 1945 has reached the end of its useful life. Nothing lasts for ever; history moves on. But it is a brave man who actually calls for substantial change ... Click Here To Read The Full Story The Master Investor Market Report The FTSE 100 closed the day at 6,721.06, a decrease of 29.37 points. The FTSE 250 rose fell 13.58 points to finish at 17,252.33. The FTSE All Share dropped 12.82 points to finish at 3,651.13. The FTSE AIM All Share finished at 753.86, up by 2.63 points. Engine manufacturer Rolls-Royce (RR.) saw its shares climb 13.52% to 831p despite reporting pre-tax losses of £2.15 billion during the six months ended 30th June. Revenues beat forecasts with a fall of just 1% to 6.46 billion. The majority of the losses came from a £2.2 billion non-cash mark-to-market devaluation of the company's derivatives positions. The interim dividend will be cut from 9.27p in 2015 to 4.60p this year.    Download our July issue today! Click HERE to read. Estate agency Countrywide (CWD) also saw a rebound in its share price even after it reported that property markets had slowed after the Brexit vote. Pre-tax profits for the six months to 30th June plunged 25% to £21.8 million, but analysts had forecast an even worse showing. However, the company's increased debts and reduced guidance have led Numis to cut its target price from 416p to 286p. The shares closed at 263.20p, up 15.90p. Film studio Pinewood (PWS) reported that, as part of its previously announced strategic review, it has reached an agreement regarding a potential cash offer of 563.2p. If the offer is made, then the board intend to recommend it. Due diligence has been completed and the bidder, a subsidiary of a US-based property fund,  is currently waiting for confirmation of its financing. The shares dropped by 24.50p to 555.50p. Tomorrow's news today Foxtons (FOXT) and Essentra (ESNT) will release interim results. Quote of the day "Blessed is the man, who having nothing to say, abstains from giving wordy evidence of the fact." - George Eliot Latest Stories Chart of The Day: AstraZeneca By Zak Mir The US Dollar may have pulled back slightly after the latest FOMC meeting, but Dollar earners such as AstraZeneca seem to be rising whatever the greenback does... Click Here To Read The Full Story Is It Time to Jump on the Mining Bandwagon? By John Cornford The 'efficient market' theory held sway for quite a time in the '90s, and for some time afterwards. It held that share prices at all times reflect all that can be possibly known about all the factors that determine their value. When you think about it, that is a pretty sweeping assumption… Click Here To Read The Full Story Chart Of The Day: ITV By Zak Mir Mystery and the stock market may be two things that go hand in hand for some, but it is usually the case that we have a rational explanation both for sentiment and value… Click Here To Read The Full Story A Possible Brexit Bargain: Fidelity Special Values By Nick Sudbury The surprise result of the EU referendum created a lot of panic selling and although most of the Brexit bargains have now recovered there are still one or two opportunities to pick up a good long-term core portfolio holding at an attractive entry level… Click Here To Read The Full Story HSBC: A Brexit Beneficiary? By Robert Sutherland Smith HSBC (HSBA) at 492p: investors can now buy HSBC shares at half the price they were seven or eight years ago on a valuation which is a 33 per cent discount to net assets and on a dividend yield of over 7 per cent. That seems to discount a lot and leave room for long-term appreciation… Click Here To Read The Full Story Join the movement on social media: Copyright 2016 Master Investor Ltd, All rights reserved. You are receiving this email because you opted in at our website. If a Daily Bulletin is too frequent, why not opt in to our once weekly mailing list for a round up of the week's news straight to your inbox. Once Weekly Round-Up Our mailing address is: Suite 88, 22 Notting Hill Gate, London W11 3JE Master Investor is a trading name of Master Investor Limited. Material contained within Master Investor Magazine and its website is for general information purposes only and is not intended to be relied upon by individual readers in making (or refraining from making) any specific investment decisions. Master Investor Ltd does not accept any liability for any losses suffered by any user as a result of any such decision.

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Market Digest: The coming US Dollar funding crisis?

My friends Neels and Mehul from Nedbank, South Africa does an amazing analyzing the global markets from a 'different' perspective – read better…

 

They have been kind enough to share this with me and now I want you to look at their latest FLAHS note as of 27 July where they warn about the signs of US Dollar funding crisis.  (Full PDF is attached)

 

(Sign up to subscribe by writing them on: Nheynek@nedbank.co.za or MehulD@nedbank.co.za)

 

The two charts I like is the TED spread (as indicator of credit risk) and the good old basis swaps spreads (as indicator of how much banks wants to bid more for USD funding relative to other currencies)

 

 

 

 

As can be seen by this chart we are close to breaking down and putting additional pressure towards US Dollar strength.

 

 

 

 

You all know I am major US Dollar bear on long term, but I firmly believe balance of 2017 is about a global banking sector challenged by flat yield curve and NIRP as a tax on profit and capital. A world where while waiting for resolution of how to expand fiscal deficits, deal with early signs of banking crisis' in Italy, Portugal, Spain, Australia, China and Germany, and accept the social contract implication which is more political noise and policy makers left with no additional tools

 

This means tighter financial conditions, rising TED spread, US funding bid over other currencies, weaker CNY and more noise – This means higher US Dollar which as you know….means less growth, less inflation, worsening EM and equity return.

 

We need to await the confirmation of Neels and Mehul's work but it's a direction which is unavoidable in my opinion as a world continues to follow Japan in shooting only two arrows out the three needed: The Fiscal and monetary policy ones – Japan may glue the two arrows together this week – but it's not a third arrow (the reform arrow) – which is the only arrow which will works to increase productivity, CAPEX spending and growth …..welcome to more of the same with less and less results to show for it.

 

I look for DXY to strengthen and likewise EURUSD to test 1.05/1.06 and potentially even 1.000 before year is over.

 

Steen Jakobsen

Singapore, July 28^th, 2016

 

 

Is It Time to Jump on the Mining Bandwagon?

Is It Time to Jump on the Mining Bandwagon? By John Cornford The 'efficient market' theory held sway for quite a time in the '90s, and for some time afterwards. It held that share prices at all times reflect all that can be possibly known about all the factors that determine their value.  When you think about it, that is a pretty sweeping assumption. If there were more than a few 'unbiased' and competent analysts following a share all the time and constantly publishing their opinions, and there were enough investors buying and selling based on their own interpretation of those opinions (and who also have the choice and the cash to buy and sell what they want when they want), then, perhaps, you can say there is a fair market. But these conditions only ever apply to a very small part of the market. A FTSE100 stock might have ten analysts following it. But in the small- and medium-cap sector (including the FTSE350) it is frequently hard to find any analyst at all following a company. Often, shares dawdle along with practically no trading. Even if there is analyst coverage, it will probably be via the 'in-house' broker, who, as we all know, exists only to raise money for his clients and, strangely enough, only happens to publish something occasionally but certainly some time before a 'surprise' cash raise comes along... Click Here To Read The Full Story The Master Investor Market Report The FTSE 100 closed the day at 6,750.40, an increase of 26.40 points. The FTSE 250 rose 196.81 points to finish at 17,265.91. The FTSE All Share climbed 19.27 points to finish at 3,663.77. The FTSE AIM All Share finished at 751.19, up by 4.92 points. Shares in online estate agency Rightmove (RMV) surged 331p to 4,121p after revenues for the half year ended 30th June climbed by 16% to £107.9 million. Site traffic improved by 15% to 127.5 million visits a month with average visit length also increasing. Management said that there may be an impact on the property market in the event of Brexit but that the firm's subscription model should give them good visibility with regard to future trends. Interim dividends will be raised from 16p to 19p.   Download our July issue today! Click HERE to read. Housebuilder Taylor Wimpey (TW.) reported that profits before tax climbed by 12% to £267 million for the six months ended 3rd July. Both completions and average selling prices grew steadily and the firm's order book for the remainder of the year has a value of £2.1 billion. Management said that there has been no impact so far from the recent Brexit vote and that forward indicators appear positive. The shares rose by 7.32% to 154.60p. There was mixed news in the hospitality sector as Mitchells & Butlers (MAB) reported a 0.7% drop in like-for-like sales during the fifteen weeks ended 23rd July and Marstons (MARS) reported like-for-like growth in all of its segments during the sixteen weeks to the same date. Both companies said that mixed weather has dragged down demand, but Marston's added that EURO 2016 had been a boon while Mitchells & Butlers said that the competition had a negative impact. Mitchells & Butlers shares closed flat at 246p, while Marstons climbed 3.60p to 142.80p. Tomorrow's news today Diageo (DGE) and Sky (SKY) will release interim results. Quote of the day "To be or not to be. That's not really a question." - Jean-Luc Goddard Latest Stories Chart Of The Day: ITV By Zak Mir Mystery and the stock market may be two things that go hand in hand for some, but it is usually the case that we have a rational explanation both for sentiment and value… Click Here To Read The Full Story A Possible Brexit Bargain: Fidelity Special Values By Nick Sudbury The surprise result of the EU referendum created a lot of panic selling and although most of the Brexit bargains have now recovered there are still one or two opportunities to pick up a good long-term core portfolio holding at an attractive entry level… Click Here To Read The Full Story HSBC: A Brexit Beneficiary? By Robert Sutherland Smith HSBC (HSBA) at 492p: investors can now buy HSBC shares at half the price they were seven or eight years ago on a valuation which is a 33 per cent discount to net assets and on a dividend yield of over 7 per cent. That seems to discount a lot and leave room for long-term appreciation… Click Here To Read The Full Story Chart of The Day: BT Group By Zak Mir It may be said by uncharitable souls such as myself that BT Group has been squirming like a toad regarding its dominant position in the market with its Openreach operations. However, it could be argued that the blame lies with the "regulator" Ofcom... Click Here To Read The Full Story Mellon On The Markets By Jim Mellon The first month anniversary of Brexit was marked by an all-day debate in London hosted by the BBC and the admirable Intelligence Squared. I went along, partly out of curiosity, and partly to see my friend Dan Hannan, possibly the most articulate and passionate of the Brexiteers… Click Here To Read The Full Story Join the movement on social media: Copyright 2016 Master Investor Ltd, All rights reserved. You are receiving this email because you opted in at our website. If a Daily Bulletin is too frequent, why not opt in to our once weekly mailing list for a round up of the week's news straight to your inbox. Once Weekly Round-Up Our mailing address is: Suite 88, 22 Notting Hill Gate, London W11 3JE Master Investor is a trading name of Master Investor Limited. Material contained within Master Investor Magazine and its website is for general information purposes only and is not intended to be relied upon by individual readers in making (or refraining from making) any specific investment decisions. Master Investor Ltd does not accept any liability for any losses suffered by any user as a result of any such decision.

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