Bill Gross – Say a little prayer

Another paper out by Bill Gross 10 days ago also with rather negative overtures towards the markets and the debt levels/interest rates, here are some snippets and a link to the full piece.

  • Draghi’s ECB and the Merkel controlled EZ ascribe to the old theory of “Feed a fever, starve a cold” – the “fever” in this case being financial bull markets fed with 0% credit, and the “cold” being fiscal austerity starved by balanced budgets. So far, the philosophy seems to be working well for Germany, miserably for Greece, and not so well for all other EZ countries in between.
  • With financial assets, the logic is straightforward: higher bond prices and stock P/E’s almost axiomatically elevate markets, although the assumed trickle-down effect leading to higher real wages has not followed suit. In the real economy, it seemed almost straightforward as well: if a central bank could lower the cost of debt and equity closer and closer to zero, then inevitably the private sector would take the bait – investing in cheap plant + equipment, technology, innovation – you name it. “Money for nothing – get your clicks for free”
  • Because BB, B, and in some cases CCC rated companies have been able to borrow at less than 5%, a host of zombie and future zombie corporations now roam the real economy
  • The BIS emphatically avers that there are substantial medium term costs of “persistent ultra-low interest rates”. Such rates they claim, “sap banks’ interest margins…cause pervasive mispricing in financial markets…threaten the solvency of insurance companies and pension funds…and as a result test technical, economic, legal and even political boundaries.”

Source: Janus 

Stocks in the news (advanc, bcp, ccp, ckp, cpn, css, drt, dtac, gunkul, hmpro, ifec, irpc, ivl, mtls, ocean, qh, sgp, singer, snc, spcg) 11.08.15

ADVANC
ADVANC is talking to TOT to become a business partner; it expects this to be finalized in August. ADVANC is ready to bid for both 1800 and 900 spectra in the 4G auction. It plans to expand its market in 2H15. It targets 2015 revenue growth of 3%. (Khao Hoon, 11/08/15)

BCP
BCP targets run at rate of 110,000 bpd despite the fall in oil price. It targets 2014 EBITDA of Bt10.4bn as it achieved 72% of its target in 1H15. (ASTV, 11/08/15)

CCP
CCP’s backlog is Bt2.3bn and it expects to bid for more, especially local government jobs and private projects. It expects 2015 revenue to be close to 2014 Bt2.6bn. It expects to benefit from dual track and high speed train projects. (Thun Hoon, 11/08/15)
Comment: Another beneficiary from the potential infrastructure projects

CKP
CKP has accelerated construction of Bang-Pa-In and Xayaburi hydroelectric power plants. It expects 2Q15 earnings of Bt131.02mn compared to 2Q14’s Bt35.38mn. (Thun Hoon, 11/08/15)
Comment: We still believe that its fairly priced despite all this earnings growth, there’s nothing really new to report from this co for the time being

Continue reading Stocks in the news (advanc, bcp, ccp, ckp, cpn, css, drt, dtac, gunkul, hmpro, ifec, irpc, ivl, mtls, ocean, qh, sgp, singer, snc, spcg) 11.08.15