Editor, Investment Strategy. Europe, Middle East and Africa, London
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Nov 2, 2012

Bond-heavy overseas funds want Obama win

LONDON, Nov 2 (Reuters) – Overseas investors, many of whom
are creditors to the highly-indebted U.S. government, reckon a
re-election of President Barack Obama would be best for world
markets even if U.S. counterparts say otherwise.

For the second month in a row, Reuters’ monthly survey of
top fund managers around the world was evenly split when asked
whether a win for incumbent Democrat Barack Obama or Republican
hopeful Mitt Romney in the Nov. 6 presidential poll would be
good for global markets.

Nov 1, 2012
via Global Investing

Weekly Radar: Leadership change in DC and Beijing?

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Any hope of figuring out a new market trend before next week’s U.S. election were well and truly parked by the onset of Hurricane Sandy. Friday’s payrolls may add some impetus, but Tuesday’s Presidential poll is now front and centre of everyone’s minds. With the protracted process of Chinese leadership change starting next Thursday as well, then there are some significant long-term political issues at stake in the world’s two biggest economies.  Not only is the political horizon as clear as mud then, but Sandy will only add to the macro data fog for next few months as U.S. east coast demand will take an inevitable if temporary hit — something oil prices are already building in.

Across the Atlantic, the EU Commission’s autumn forecasts next week for 2012-14 GDP and deficits will likely make for uncomfortable reading, as will a fractious EU debate on fixing the blocs overall budget next year. But the euro zone crisis at least seems to have been smothered for now. Spain seems in no rush seek a formal bailout, will only likely seek a precautionary credit line rather than new monies anyway and needs neither right now in any case given a still robust level of market access at historically reasonable rates and with 95% of its 2012 funding done. According to our latest poll, more than 60% of global fund managers think Spanish yields have peaked for the crisis. Greece’s deep and painful debt problems, shaky political consensus and EU negotiations are all as nervy as usual. But tyhe assumption is all will avoid another major make-and-break standoff for now. More than three quarters of funds now expect Greece to remain in the euro right through next year at least.

Oct 31, 2012

Global funds build up U.S. equity, euro bonds in October – Reuters poll

LONDON (Reuters) – Global investors boosted equity holdings to their highest in six months in October, even as world stock markets wobbled, and slashed cash levels to their lowest since February, a Reuters poll showed on Wednesday.

In the month before the U.S. presidential election and despite some dour signals from the third-quarter earnings season, U.S. stocks were most in demand as macroeconomic data stateside continued to produce some positive surprises.

Oct 31, 2012

Analysis: Investment sponges for a growth-saturated world

LONDON (Reuters) – When paltry growth, systemic risk and resource scarcity are darkening the global horizon, investors must hunt shrewdly to find stocks resilient enough to ride out the storm.

Far from being cathartic, the past five years of credit crisis and the subsequent slow, painful debt paydown has merely nudged the world economy deeper into the dangers posed by dramatic population growth, aging in rich economies and shortages of natural resources and capital.

Oct 31, 2012

Investment sponges for a growth-saturated world

LONDON (Reuters) – When paltry growth, systemic risk and resource scarcity are darkening the global horizon, investors must hunt shrewdly to find stocks resilient enough to ride out the storm.

Far from being cathartic, the past five years of credit crisis and the subsequent slow, painful debt paydown has merely nudged the world economy deeper into the dangers posed by dramatic population growth, aging in rich economies and shortages of natural resources and capital.

Oct 26, 2012

Betting on policies, not their success

LONDON, Oct 26 (Reuters) – Global investors seem happy to
feed off central banks’ reflation policies but not necessarily
their eventual success.

Just a glance at this week’s bout of earnings-related market
angst shows how little conviction there still is in a
sustainable global recovery — or the fabled ‘green shoots’.

Oct 25, 2012
via Global Investing

Weekly Radar: Earnings wobble as payrolls, BOJ, G20 eyed

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Easy come, easy go. A choppy October prepares to exit on a downer – just like it arrived. World equities lost about 3 percent over the past seven, mostly on Tuesday, and reversed the previous week’s surge to slither back to early September levels. Just for the record, Tuesday was a poor imitation of the lunge this week 25 years ago – it only the worst single-day percentage loss since July and only the 10th biggest drop of the past year alone. But it was a reminder how fragile sentiment remains despite an unusually bullish, if policy-driven year.

Why the wobble? t’s hard to square the still fairly rum, or at best equivocal, incoming macro data and earnings numbers alongside year-to-date western stock market gains of 10-25%. There’s more than enough room to pare back some more of that and still leave a fairly decent year given the macro activity backdrop and we now only have about 6 full trading weeks left of 2012. So it will likely remain bumpy – not least with U.S. and Chinese leadership changes into the mix as mood music. The sheer weight of a gloomy Q3 earnings season seems to have hit home this week, with revenue declines or downgraded outlooks  – particularly in “real economy” firms such as Caterpillar, Dupont,  Intel and IBM etc – worrying many despite more decent bottom line earnings. As some investors pointed out, earnings can’t continue to beat expectations if revenues continue to wither and there are still precious few signs of an convincing economic turnaround worldwide to draw a line under the latter.

Oct 24, 2012
via Global Investing

Pricing ‘new brooms’ at White House and Fed

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With less than two weeks left to the U.S. presidential elections and all three televised debates done and dusted, investors are at last squaring up to the detailed financial market impact of the event itself and the column inches in newsprint and research reports lengthen by the day.

Barclays interest rate strategists are one of the first to stick hard numbers on likely market outcomes in a report late Tuesday that dug deep into both the well-documented “fiscal cliff” but also into the less discussed uncertainty surrounding the medium-term direction of the Federal Reserve and its leadership.

Oct 19, 2012

Few wake-up signs for snoozing euro/dollar

LONDON, Oct 19 (Reuters) – With all else around it in flux,
the world’s biggest market — the U.S. dollar and euro exchange
rate — has virtually dozed off.

Its relative stasis is as striking as some of the wilder,
erratic market swings elsewhere.

Oct 18, 2012
via Global Investing

Weekly Radar: Global PMIs; US/UK GDP; FOMC; Heavy earnings, inc Apple

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Whoosh! The gloomy start to the final quarter seems to have been swept away again by the beginnings of a half decent earnings season stateside – at least against the backdrop of dire expectations – and a steady drip feed of economic data surprises from the United States and elsewhere. Moody’s not downgrading Spain to junk has helped enormously and the betting is now that the latter will now seek and get a precautionary credit line, which would not require any bailout monies up front but still unleash the ECB on its bonds should they ever even need to – and,  given Thursday’s successful sale of 4.6 billion euros of 3-, 5- and 10-year Spanish government bonds,  they clearly don’t at the moment (almost 90% of Spain’s  original 2012 borrowing target has now been raised). What’s more, Greek euro exit forecasts have been put back or reduced meantime by big euro zone debt bears such as Citi and others, again helping ease tensions and defuse perceived near-term euro tail risks. Obama’s bounceback in the presidential polls after the latest debate may be helping too by rolling back speculation that a clean sweep rather than a more likely gridlock was a possible outcome from Nov 6 polls. China Q3 GDP came in as expected with a marginal slowdown to 7.4% and signs of growth troughing — all adding to the picture of relative calm.

So, in the absence of the world ending in a puff of smoke – and the latest week of data, earnings and reports suggests not – we’re left with a view of a hobbled but stabilising world economy aided by hyper-easy monetary policy that is bolting core interest rates to zero. Tactical investors then, at least,  are being drawn into the considerable pricing anomalies/temptations across bond and credit markets as well as the giant equity risk premia and regional price skews.

    • About Mike

      "Mike Dolan is Reuters' Investment Strategy Editor in Europe. He has been a correspondent and editor for the past 20 years, working for Reuters from London and Washington DC in a variety of roles covering global policymaking, economics and investment trends."
      Hometown:
      Tralee, Co Kerry
      Joined Reuters:
      1995
      Awards:
      Reuters Editor of the Year, 2009. Reuters multimedia journalist of the year award, 2011
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