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2016-10-31

MacroView: World Markets, Global Economy, Central Banks, Trick or Treat?

MacroView | © DomainMondo.com
Domain Mondo's weekly review of  macro economic and investing news:

MacroView Feature •  Just in time for Halloween: World Markets, Global Economy, Central Banks, Trick or Treat?

Halloween in the global economy:

The FT.com's Katie Martin and Anthony Doyle of M&G (domain: mandg.com) discuss current fears in the fixed income market, including negative yields, inflation growth and emerging markets debt. Published October 28, 2016

•  China Gets Desperate About Debt"China doesn’t need a new debt-for-equity swap program. It needs to cut credit growth."--Bloomberg.com

Why China is worried about its lending:

There is growing concern in Beijing about China’s development lending in risky countries. FT.com's James Kynge explains. Published October 26, 2016. See also Xi Jinping Is China’s ‘Core’ Leader: Here’s What It Means | NYTimes.com.

•  China’s Crown Probe Seen as Warning Shot to Foreign Firms: "... some business consultants in general ... [are] advising foreign executives to steer clear of mainland China for now."--WSJ.com

•  A $1 Trillion Industry Is Finally Going Digital"The $1 trillion global business of shipping goods and raw materials by rail, ship, or plane has lagged most of the modern economy in both transparency and speed, largely skipping the digital overhaul most other industries have undergone. Now a growing group of well-funded startups is pushing to change that."--technologyreview.com

•  Why the Jobs Aren’t Coming Back: A plant in Michigan had been around for years. It had employed 600 people on two shifts. Then, the Chinese began to undercut the pricing, and the plant was no longer profitable and closed. Two years later, it reopened as a fully automated plant and regained the business because it could now manufacture cheaper than the Chinese--"This new plant is fully automated and runs 24/7/365 with just 14 people."--WolfStreet.com

•  Things I Don't Care About And You Shouldn't Either: "One of the biggest challenges for investors is filtering out bad, useless or even costly 'information.'"--SeekingAlpha.com

•  Faulty Wall Street Assumptions"Complex markets require complex solutions." To me, this is one of the most damaging myths out there for most investors. The simpler, the better ... There are no extra points for degree of difficulty.--aWealthOfCommonSense.com

•  The New Corporate Power Brokers: Passive Investors"Index-fund managers such as Vanguard often cast deciding shareholder votes on issues such as mergers and leadership changes."--WSJ.com

•   Bubble Mentality Collapses in San Francisco Office Market"This is how office markets turn. Activity plunges as demand suddenly fizzles, while new supply floods the market. Exuberance evaporates. Suddenly companies and landlords go into a standoff, and not much happens until rents come down. But once rents start coming down, companies are holding out for even more concessions and lower rents. Rather than bidding wars, tough negotiations set in, now that vacancies are rising for everyone to see. And the whole bubble mentality collapses into something resembling rational and focused business decision making."--WolfStreet.com

•  Financial Ideas vs Marketing Ideas“There’s one good financial idea every decade or so, and 5 to 10 marketing ideas a week.”--Eugene Fama as quoted in The Art of Doing Nothing--aWealthOfCommonSense.com [Clue: ICANN's new gTLDs are just a "marketing idea"--no real innovation nor financial ideas are involved.]

•  Gundlach Says ‘Look Out’ for Exploding U.S. Deficits | Bloomberg.com Oct 25, 2016: "Bond yields bottomed and prices peaked in July, Jeffrey Gundlach said. Federal Reserve Chair Janet Yellen wants a “high pressure economy” with inflation above 2 percent and the unemployment rate below 5 percent, he said."  Gundlach still believes Donald Trump will win:“Trump would -- and will when he wins -- ramp up the deficit,” Gundlach said." See also Gundlach: Why the “Rates Will Never Rise” Argument Doesn’t Hold Up | WealthManagement.com: “In July, people came on TV and I actually heard the phrase, ‘rates can never rise,’” he said. “One thing I’ve learned is that in the investment business when you hear the word ‘never,’ it’s about to happen.”

•  Gundlach's view on Trump may be vindicated on November 8. There are two indicators that Trump may be doing better than polls suggest in some states, reports the New York Times--If They Google You, Do You Win? | NYTimes.com--1) The main insight from Google searches this year is that African-American turnout may be down in 2016; 2) nationwide, there are more searches that include “Trump” before “Clinton” (where a search includes the names of both candidates, the name appearing first is a known preference indicator in favor of that candidate). Even the latest re-emergence of the Clinton email scandal now favors Trump: more than 3 in 10 voters say the news made them less likely to support Clinton according to a Washington Post-ABC News tracking poll.

Q3 2016 financial results coverage this coming week on DomainMondo.com:
  • Alibaba Group $BABA Nov 2 at 7:30 am ET
  • Facebook $FB Nov 2 at 5:00 pm ET
  • GoDaddy $GDDY Nov 2 at 5:00 pm ET

•  A Look Back to August 31, 1999Whatever Happened to Globalization? | Fast Company | Business + Innovation | fastcompany.com"Overcapacity plagues every industry — from automobiles to computer chips to beer. Quite simply, we are producing more stuff than people can consume. So it's harder to differentiate yourself. It's harder to charge premium prices. And it's harder to innovate — because product improvements get copied at light speed. Channel issues pose an even bigger problem. History teaches us that no old channel of distribution ever adapts quickly enough to the emergence of a new channel. And with the rise of the Web, new channels of distribution — along with entirely new business models — are being created faster than ever before. Traditional assumptions about strategy, pricing, and selling are under fierce attack. The Web threatens to turn every industry upside down and inside out."--Martin Sorrell

-- John Poole, Editor, Domain Mondo 

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