Most Recent Audio: 22 May 2015

David Fuller and Eoin Treacy's Free (Abbreviated)
Comment of the Day

The more detailed Subscriber's Comment of the Day becomes available for public access after 4 months.

Click HERE to see the most recent free Subscriber's Comment from 20 February, 2015

May 22 2015

Commentary by Eoin Treacy

Yellen Sees Rate Rise in 2015, Gradual Tightening Thereafter

This article by Jeff Kearns, Jeanna Smialek and Craig Torres for Bloomberg may be of interest to subscribers. Here is a section:

She also repeated the Fed’s two criteria for raising rates, which have been kept near zero since December 2008: “I will need to see continued improvement in labor market conditions, and I will need to be reasonably confident that inflation will move back to 2 percent over the medium term.”

Policy makers expect growth to pick up after stalling in the first quarter, even as they fret about the strength of the consumer spending that makes up two-thirds of the economy, minutes of their April meeting released Wednesday show.

Yellen said it will be best to proceed “cautiously,” which means taking “several years” before policy makers lift the federal funds back to its normal, longer-run level.

Even after significant employment gains, the labor market “is approaching its full strength,” though still short of it, Yellen said. While the U.S. is nearing what many economists say is full employment, the jobless rate “probably does not fully capture the extent of slack in the labor market,” she said.


Eoin Treacy's view

Today’s news that discount fashion retailer Ross Stores has joined Wal-Mart, T.J.Maxx and Target in raising their starting wage to $9 suggests that companies are seeing tightness in the labour market. This is follows the decision this week that Los Angeles will be raising its minimum wage to one of the highest in the world by 2020. The Fed will be watching these developments closely not least because these are such large employers. 

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May 22 2015

Commentary by Eoin Treacy

Confessions of a Capital Junkie: An insider perspective on the cure for the industry's value-destroying addiction to capital

Thanks to a subscriber for this report from Fiat Chrysler Automobiles (FCA Group) which may be of interest to subscribers. Here is a section: 

High mortality rate caused by partial if non-existent integration
Cultural divide (corporate and otherwise)
Inequality of integrating parties
Operating models radically different and never merged
Insufficient sensitivity for brand differences
Lack of respect/trust for one another
Complexity proved to be too much of a stretch for leadership teams


It enables
Fast execution, enabling rapid scale gain
Fostering step-change/best-of-best approach to modularity/ commonality


 The potential savings are too large to ignore


Eoin Treacy's view

Mr. Marchionne’s most relevant comments are to be found about an hour into this lengthy call. Apple holds the intellectual property to its products and excels at marketing but outsources its production. Car companies have so far been unable to outsource production despite the obvious cost advantages this would provide. Mr Marchionne’s belief that this capital intensive mechanism needs to change is worthy of consideration because it would result in value creation if he can achieve it. 

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May 22 2015

Commentary by Eoin Treacy

Email of the day on cryptocurrencies and distributed data

I tuned in to most of your Webinar. Excellent, and as always it gave me much to ruminate on.

Here is something also to ponder; pretty speculative but also with much to think about and references to many initiatives in this space that I had not heard of. Not sure if it should be of interest to the FTM collective.


Eoin Treacy's view

Thank you for your kind words and I’m delighted you enjoyed the presentation. It has now been uploaded to YouTube. Here is a link 

I agree this article is speculative but it highlights some important points that are worthy of consideration. There is an undeniable trend towards digitisation of just about everything. If information is power, then it has a value and protecting it is more important than ever.

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May 22 2015

Commentary by Eoin Treacy

India quest for outperformance: cyclical outlook and structural agenda

Thanks to a subscriber for this report from Deutsche Bank which may be of interest. Here is a section:

1) No trade-off between growth and inflation in the long term – Imperative to get inflation and inflation expectations down, to achieve higher growth and investments.

2) Growth is important, but composition of growth is even more important – healthy mix of consumption and investment growth needs to be achieved to prevent macro imbalances from building up

3) Need to maintain positive real interest (1.5-2.0%) in the economy – to incentivize higher financial savings, which is critical to fund investment needs of the country; unless this is achieved, pressure on current account deficit will persist

4) Inflation glide path – RBI has targeted to bring CPI inflation down to 6% by Jan 2016 and to 4% thereafter; need to sustain CPI inflation at 4-6% in the medium term 5) Current account deficit – Policy framework should be geared to sustain current account deficit at about 2.0-2.5% of GDP


Eoin Treacy's view

A link to the full report is posted in the Subscriber's Area. 

India is an example of a country where people have voted for improving governance because they understand it is the only way the country will be able to capitalise on its demographic dividend. Developing a manufacturing base capable of employing millions of new urban workers will require major initiatives in terms of regulation, liberalisation, infrastructure development and policy stability. There is every reason to believe India is moving in the right direction to achieve these objectives. 

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May 22 2015

Commentary by David Fuller

The Markets Now

Monday 15th June, at the East India Club, 16 St. James’s Square, London SW1Y 4LH

David Fuller's view

Here is the new brochure listing some of our topics and the important questions most investors face.  I think all investors will benefit from guest speaker David Brown’s new presentation. I learned from it, not least how to assess some familiar data more clinically.  In other words, he shows us how to think a little more clearly, particularly in terms of identifying bear markets near their tops.  This is never easy given all the emotions involved.  Many people jump the gun, as you will have seen over the last few years, which can leave them susceptible to overstaying when the important and often overlooked warning signs are flashing.  Note also Iain Little’s challenging topic summarised in the penultimate question.  I look forward to their presentations and also to hearing the views of friends and subscribers.  

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