Listen, if you’re in the mood to “top up some high conviction positions” in EM, M&G Investments’ director Jeik Sohn thinks this might be your chance. For what it’s worth, Sohn is responsible for M&G’s global EM equity portfolio which means he’s managing something like $2.8 billion in assets. When it comes to South Korean shares, he thinks the so-called “Korea discount” (which is basically just “Kim risk”) is offset by fundamentals. Because as Bloomberg notes, the “Kospi’s 2017 PE is 9.9x versus ~14X for MXAPJ, while estimated earnings growth for the Kospi is 55% y/y for 2017.” Here’s a visual on that ...
Income is difficult to come by in today’s financial markets. Here are some interesting statistics to help drive this point home: The S&P 500 has a current dividend yield of just 1.9% (down significantly from its long-term average of 4.4%) The 10-Year U.S. Treasury Bond has a current yield to maturity of 2.2%, which is also down significantly from its long-term average level of 4.5% The S&P 500 has a current price-to-earnings ratio of 24.7, substantially higher than its long-term average of 15.7. High stock valuations result in lower dividend yields, all else being equal. These factors make it clear: there are not many opportunities...
Introduction Politicians in Massachusetts, New York, and Rhode Island have put aside moral and/or addiction concerns over gambling. Instead, they recently asked why all the gambling dollars from their citizens go to the casinos (and governments) in Connecticut and New Jersey. They responded by approving for new gaming facilities in all three states. Below, data on these actions is presented with commentary. The Current Situation Table 1 provides gambling revenues and how they have changed since 2007 for northeast US states, with California, Nevada and Macau included as points of reference. The growth in Macau has been truly amazing. And add...
After the 2007-2009 global financial crisis, fears of ballooning public debt and worries about the drag on economic growth pushed authorities in some countries to lower government spending, a tactic that economists now think may have slowed recovery. Note that in the United States the total debt to GDP ratio stood at 349 in Q1 this year. In a paper presented at the Kansas City Federal Reserve’s annual economic symposium on August 26, 2017, Alan Auerbach and Yuriy Gorodnichenko from the University of California suggested that “expansionary fiscal policies adopted when the economy is weak may not only stimulate output but also reduce debt-t...
The US Dollar edged lower against safe haven currencies, specifically the Swiss Franc and the Japanese yen, after the latest nuclear test from North Korea prompted investors toward safe havens. Despite the drive, FX traders kept moves in safe haven pairs within “normal” ranges as they appear to have assessed a low probability threshold on a full scale break-out. One currency strategist in Switzerland believes that the reaction will remain relatively muted unless there is an escalation of the conflict. The US government has warned North Korea that a “massive” military response would be forthcoming if a real threat is perceived. As rep...
The average hourly wage has risen by 2.5 percent in the last year. We have that on pretty good data from Bureau of Labor Statistics. That’s okay in a context of inflation around 1.7 percent (it translates into 0.8 percent real wage growth), but hardly great. It is not keeping pace with trend productivity growth and is not allowing much catch-up from the bad years in the Great Recession and the immediate aftermath. It also indicates no acceleration from the last two years in spite of unemployment rates that are below the level at which point most economists expect wages to be accelerating. There have been several efforts to pump up thi...
The auto industry has been struggling this year after seven consecutive years of growth. This is especially true as auto sales dropped 1.8% year over year to an annualized 16.13 million units in August, marking the lowest level since February 2014. This was the eighth straight monthly decline in sales thanks to Hurricane Harvey. Of the six major American and Japanese automakers, General Motors (GM – Free Report) and Toyota (TM – Free Report) saw sales increase of 7.5% and 6.8%, respectively, while Nissan Motor (NSANY – Free Report) and Fiat Chrysler (FCAU – Free Report) posted the biggest sales decline of 13% a...
“Oceania was at war with Eurasia; therefore Oceania had always been at war with Eurasia.”1984, George Orwell. The hurriedly organized investor call with Plains All American (PAA ) a week ago (rushed because of approaching Hurricane Harvey) must have been inspired by the revisionist history propagated by “the Party” in Orwell’s polemic against totalitarianism. PAA’s distribution “reset” (Newspeak for a cut) was larger than previously expected and was directed towards rapidly lowering leverage. Like Orwell’s Ministry of Truth, they explained “…we have assessed the appropriate distribution level to accelerate our deleveragi...
ETH/USD Daily Chart Technical Outlook: Ethereum prices reversed off slope resistance last week with the decline now approaching in initial support at the confluence of the 100% extension, the 38.2% retracement and the trendline extending off the July lows at 295-303. Heading into the start of the month, the focus will be on this region and price will need to stabilize here if the broader ascending channel structure is to remain viable. ETH/USD 240min Chart Notes: Last week we noted Ethereum price targets at, “374 backed by 385– Note that this level also converges on parallel resistance into the close of the month.” Indeed the...