Apples numbers were fantastic and the cash flow generation better than anything in history ( and better than most of European economies). We think markets are a little tired from US earnings season and this could play well for relative value trades towards EM.
Apple is certainly now a full-fledged EM equity story with China sales +71% and overall revenue mix now at 29% to China vs 37% for Americas.
Greece continues in the headlines but largely noise in our view.
Greek PM Tsipras said the big disputes between his negotiating team and the Eurogroup remained unchanged: labor reform, public sector worker layoffs and VAT hikes on the islands. He said it was possible the country would have to hold a referendum, if the Eurogroup continued to push for measures that were outside the election mandate. He said the cash priority would be to wages and pensions, rather than to its debt payments and obligations to the IMF.
But the Euro continues to rally ( which European stocks don’t like this AM) where we expect a 1.10 push this week will be met with some short term profit taking on the currency and more weakness across EU bourses until that profit taking.
Spanish 10yr breaks back below 1.30% and has taken back most of the scare from 10 days ago
And Italy better..
Meanwhile Japanese retail sales last night dropped significantly (-1.9%). Japan still struggling to breakout on macro while stock market remains well big in hedge fund community.
…Look at the Dollar. Doesn’t it resemble the inverse of the Euro chart? Wasn’t Dollar strength more about Euro weakness than anything else?
Commodity currencies continue to move higher and Aussie driven by expectations of policy support for the FX as well.
Emerging Market trades closer to September 1yr highs on the MSCI EM…
We are very impressed with oil price action. Oil analysts are not convinced…We are. Brent has bottomed and did so in January.
Gold spot is intriguing. Holding $1200 has massive implications for upside to Gold miners…
