(MENAFN- ProactiveInvestors) The 20 Fastest-Growing Economies This Year
Here is the opening from this interesting article from Bloomberg: Emerging markets in Asia and Africa still reign supreme: They're at the top of global growth projections over the next two years.
The world is expected to grow 3.2 percent in 2015 and 3.7 percent next year after expanding 3.3 percent in each of the past two years according to a Bloomberg survey of economists. China the Philippines Kenya India and Indonesia which together make up about 16 percent of global gross domestic product are all forecast to grow more than 5 percent in 2015.
By comparison the U.S. and U.K. which combined account for about a quarter of global growth are expected to grow 3.1 percent and 2.6 percent this year respectively. The euro area probably will expand just 1.2 percent as European Central Bank President Mario Draghi deals with a fragile Greece and embarks on a bond-purchase program to stimulate the region's growth.
David Fuller's view
I would not be surprised if some of these growth projections are a little too conservative given that the price of crude oil is low. Moreover accelerating technological developments may not show up in national GDP figures just yet but they are more likely to have a positive effect on the corporate earnings of larger companies.
This item continues in the Subscribers’ Area where the top six countries in the GDP growth estimates are reviewed on charts and valuations.
Email of the day
On Monday’s Markets Now:
“I was not able to be at the Markets Now presentation on Monday but have been though your Powerpoint presentation which is truly invaluable! Many thanks from a long-term private subscriber.”
David Fuller's view
Thank you for your kind words and I hope you will be able to attend a future Markets Now event. On behalf of the speakers at these sessions what makes them special is the participation of knowledgeable subscribers who love the markets. That carries on well into the evening when we adjourn to the spacious Club bar.
The Strategic View: 2015 Asset Allocation Strategy: Maintain Equity Weights As High As Investor Time Frames Will Allow
My thanks to Michael Jones of RiverFront for the latest edition of his excellent report. Here is a brief sample:
The S&P 500’s recent record high and 165%-plus rise from its March 2009 lows have sparked fears of an equity Bubble similar to the late 1990s. We disagree. Large cap stocks were more than 100% overvalued in 2000 and about 25% above trend before the crash of 2008. Gains since 2009 have reversed the 2008 market collapse and large cap stocks are about 5-10% above their long-term trend. The primary implications of large cap stocks returning to trend is lower return expectations and slightly elevated downside risks in our view.
David Fuller's view
While cautious this is a long way from some of the alarmist and possibly self-serving forecasts that have made the rounds recently.
So what does Michael Jones actually like
This item continues in the Subscribers’ Area where Michael Jones' report is also posted.
My personal portfolio
A new trade opened
David Fuller's view
Details and charts are in the Subscribers’ Area.
The Markets Now
Our probable date for the next seminar is Monday 20th April and we should have confirmation later this week.
David Fuller's view
This item continues in the Subscribers’ Area where David Brown’s excellent technology presentation: The Third Industrial Revolution: Investment opportunities via stock markets is posted.
Musings from the Oil Patch February 24th 2015
Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section on currency wars:
A contributing factor for the weak economic activity in recent years has been countries holding the line on their currencies. That attitude may be changing which could be good news for energy demand as currency devaluations are designed to pump up economies. According to a study written by economic historian Barry Eichengreen of the University of California Berkeley the countries that were the first to engage in monetary easing in this case the break with the gold standard recovered the fastest. In 1931 it was Britain that broke from the gold standard first and the first nation to recover. Today we are relearning this history.
Since the U.S. was the first country to engage in massive monetary easing in 2008 our economy was the first to recover. As counted by investment bank Evercore ISI there have been some 514 monetary easing moves by central banks over the past three years. According to ’s (MS-NYSE) global strategists there are now 12 central banks around the globe that have recently moved to ease their monetary policies. As this was happening U.S. monetary authorities are discussing increasing interest rates and in effect becoming the recipient of deflationary pressures driven out by those countries easing their monetary policies. Because China has tied its currency to that of the United States it will also receive deflation.
The prospect of raising interest rates in the U.S. has led to a strengthening of the dollar which has been a contributing factor to the fall in oil prices and other commodity prices. As pointed out by the analysts not everyone can be a winner in the currency wars. Therefore there will be one or more losers with the U.S. and China on the short end of the stick right now. Given the recent weakening statistics in retail sales home building and now certain regional manufacturing data in the U.S. one wonders whether the Federal Reserve will not hike interest rates this year as broadly expected. We are also seeing moves by the Chinese government to ease its monetary policy to help bolster its local and regional governments and their banks to offset the flow of currency out of the country. Being tied to the U.S. dollar the renmimbi has had an upward bias as the dollar has strengthened. That trend induced Chinese companies to borrow outside of the country expecting to be able to pay off the loans with cheaper local currency. Now the renmimbi continues to weaken within a very tight band in response to the currency outflows. China monetary authorities struggle with whether to weaken its currency and stimulate economic growth but that move runs the risk of leading to an increase in corporate bankruptcies. Is it possible that we could soon see every country engaged in monetary easing trying to promote its own economic self-interest What would that mean for future energy demand and oil prices
Eoin Treacy's view
A link to the full report is posted in the Subscriber's Area.
Japan’s decision to embark on broad based monetary easing in order to kick start inflation in its economy was the catalyst for the competitive devaluation we now see just about everywhere. Various international currency agreements such as Bretton Woods I and II or the Plaza Accord eventually run their course and a rebalancing occurs as one country or another seeks an advantage. Eventually the process is taken to extremes which creates the conditions necessary to encourage governments to agree to support multilateral intervention. We are still a long way from such a move.
Email of the day on calculation of CAPE
I am not a subscriber but CIO of a Trust Company in Japan. I suggest that you check the data on the 5 year CAPE. If you take the data off the Shiller website you will find that the current 5 year CAPE is 23.97 rather than 27.85 and the historic average for the 5 year Cape is 15.83 (vs 10yr of 16.59). Stanberry's research shows an average of close to 25... but is probably only going back to 1990. So still 50% overvalued. Also if you are going to ignore 2009 data you should probably ignore 2005 and 2006 data when earnings were inflated by the bubble.
Eoin Treacy's view
Thank you for this informed contribution and commitment to our Empowerment Through Knowledge theme. The fact that we are having this conversation is an indication that investors are finding it increasingly difficult to find shares they consider cheap. However the more important point is that we do not have evidence of topping activity or a loss of momentum for the major indices.
Home-Price Gains in 20 U.S. Cities Accelerated in December
This article by Nina Glinski for Bloomberg may be of interest to subscribers. Here is a section: Twelve cities including Denver Cleveland and Seattle experienced larger year-to-year gains in December compared with the prior month.
Easing credit standards would help draw more first-time buyers into the market while borrowing costs for those who can obtain credit remain near historic lows. The average rate on a 30-year fixed mortgage was 3.76 percent in the week ended Feb. 19 according Freddie Mac in McLean Virginia. That’s still close to the record-low of 3.31 percent reached in November 2012.
Wider credit availability will mean growth for builders like Scottsdale Arizona-based Taylor Morrison Home Corp.
“We are excited to see incremental positive changes in the mortgage market that should continue to move the recovery forward” Sheryl Palmer the company’s chief executive officer said on a Feb. 4 earnings call. Signs of first-time home buyers and reentrants to the market suggest future growth is coming.
Other data show the residential real estate recovery remains uneven. Purchases of previously owned homes fell more than expected in January to a 4.82 million annualized rate as a tight supply forced up prices figures from the National Association of Realtors showed Monday.
Eoin Treacy's view
The USA does not have the aging population profile of Europe or much of developed Asia because of the number of immigrants that continue to choose to live here rather than anywhere else. While the aging of the babyboomers is a challenge the household formation rate of the millennials should pick up over the next decade. It remains to be seen how the housing market will perform as economic growth competes with interest rates in the calculation of affordability for consumers.
Email of the day on selecting ETFs
Hi Thanks for your ongoing excellent service. Could you suggest particular Euro-denominated EFTs for tracking European indices or the Euro Stoxx 50 And suggestions on particular EFTs for tracking indices in India and China. I'd appreciate your thoughts how you approach selecting/assessing/ comparing EFTs. Many thanks.
Eoin Treacy's view
Thank you for this question which I suspect will be of interest to other subscribers. ETFs in the classic sense represent a powerful innovation in the financial sector by offering consumers access to themes sectors and country indices that were once only open to well-heeled institutional investors. The low fee structure and cheap cost of listing means that the business case for launching ETFs depends on attracting assets. As a result the number of products on offer has proliferated but liquidity is often a consideration. Just as with any investment due diligence is required and this is even more important with non-standard or leveraged products.
Within the Funds section of the Chart Library we have categorised each fund by Domicile Currency Geographic Focus Type Objective and Theme. We have 740 ETFs which is obviously not complete considering how quickly the sector is expanding. The list of funds in the Library has grown organically over the last decade as subscribers have requested additions. The result is that the majority of instruments are denominated in the currencies of the countries where our subscribers are based. For a Euro investor I would suggest looking at the 70 Euro denominated funds. By clicking through you will see just how much the Euro’s weakness has flattered the performance of global indices.
As the largest Euro domiciled fund provider Lyxor probably has the most complete range of Euro denominated ETFs. However it does not appear to have an English language site for Euro denominate funds so I performed a search on Bloomberg to find a complete list. I removed funds with less than $20 million under management and those with average 30 day volume of less than 1000 shares. There are 387 results.
Speaking Engagements 2015
Eoin Treacy's view
I have accepted an invitation to speak at the annual MTA Symposium in New York on March 26th and 27th. The topic of my talk will be Quality Trends: Bet on quality and monitor consistency
The Chart Seminar 2015
Eoin Treacy's view
Following a productive collaboration last year we have agreed to co-host another Chart Seminar with the CFA Institute in Singapore. This will be on April 16th and 17th at the M Hotel on 81 Anson Road.
To book your place or express interest please contact Sarah Barnes at sarah@fullertreacymoney.com
The full rate for The Chart Seminar is £950 + VAT. (Please note US Australian and Asian delegates as non EU residents are not liable for VAT). The early booking rate of £875 for non-subscribers expires two months ahead of the event start date. Subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.
Private Seminars and Partnering Opportunities
We are also available to conduct private seminars and occasionally agree to speaking engagements at investment conferences and professional societies.
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