October Rolls On

Though it's the case every week, this week's issue of The Economist is simply quite excellent. China is the cover story and there's a good piece on Airbus as well which I'll recap shortly.

Key economic data for the upcoming week (GMT):

Sunday, 14 October 2007

2145 NZ Q3 consumer prices (1.0% q/q)

2145 NZ Q3 consumer prices (2.0% y/y)

2300 NZ September performance of services index

2301 UK October Rightmove house prices (-2.6% m/m)

Monday, 15 October 2007

0030 Japan Bank of Japan Governor Fukui speaks

0430 Japan August industrial production (3.4% m/m)

1230 US October Empire manufacturing index (14.7)

1230 Canada September leading indicators (0.3% m/m)

1525 US Treasury Secretary Paulson speaks

2300 US Federal Reserve Chairman Bernanke speaks

Tuesday, 16 October 2007

0600 Germany September consumer price index (0.2% m/m)

0715 CH August retail sales (3.3% y/y)

0830 UK September consumer price index (0.4% m/m)

0830 UK September retail price index (0.6% m/m)

0900 Germany October ZEW, economic sentiment (-18.1)

0900 Germany October ZEW, current situation (74.4)

0900 Eurozone October ZEW, economic sentiment (-20.3)

0900 Eurozone September consumer price index (0.1% m/m)

1300 US August TICS net long-term capital flows (US$ 19.2 billion)

1300 US August TICS total net capital flows (US$ 103.8 billion)

1300 Canada Bank of Canada interest rate decision

1315 US September industrial production (0.2%)

1315 US September capacity utilization (82.2%)

1700 US October NAHB housing market index (20)

2350 Japan August tertiary industry index (-0.5% m/m)

Wednesday, 17 October 2007

0030 Australia August Westpac leading index (0.2% m/m)

0500 Japan August coincident index (83.3%)

0500 Japan August leading economic index (30.0%)

0830 UK Bank of England Monetary Policy Committee meeting minutes

0830 UK August ILO unemployment rate (5.4%)

1230 US September consumer price index (-0.1% m/m)

1230 US September consumer price index, ex-food and energy (0.2% m/m)

1230 US September housing starts (1.331 million)

1230 US September building permits (1.322 million)

1230 Canada August wholesale sales (2.0% m/m)

1800 US Federal Reserve Beige Book

2350 Japan Net equities investment (¥274.1 billion)

2350 Japan Net bonds investment (¥52.0 billion)

Thursday, 18 October 2007

0045 US Kansas City Federal Reserve President Hoenig speaks

0130 Australia Reserve Bank of Australia monthly bulletin

0530 Japan September nationwide department store sales (1.4% y/y)

0530 Japan September Tokyo-area department store sales (4.5% y/y)

0830 UK September retail sales (0.6% m/m)

0900 CH October ZEW survey, expectations (-26.7)

0900 Eurozone August trade balance (€4.6 billion)

0800 Eurozone August construction output (0.0% m/m)

1230 US Weekly initial jobless claims (308,000)

1230 US Continuing jobless claims (2.521 million)

1230 Canada August international securities transactions

1400 US September leading indicators (-0.6%)

1430 US Cleveland Federal Reserve President Pianalto speaks

1600 US Philadelphia Federal Reserve President Plosser speaks

1600 US October Philadelphia Fed index (10.9)

2100 US European Central Bank President Trichet speaks

2350 Japan August all-industry activity index (-0.4% m/m)

Friday, 19 October 2007

0130 Australia Q3 import price index (0.1% q/q)

0130 Australia Q3 export price index (0.3% q/q)

0600 Germany September producer prices (0.1% m/m)

0830 UK Q3 GDP (0.8% q/q)

0830 UK August index of services (1.0%)

1100 Canada September consumer price index (-0.3% m/m)

1100 Canada September consumer price index, core (0.1% m/m)

1200 Spain European Central Bank member Gonzalez-Paramo speaks

1400 US Federal Reserve Chairman Bernanke speaks

1400 US St. Louis Federal Reserve President Poole speaks

(Source: GCI Financial)

Busy Busy

I've been in London for more than two weeks now, almost forgetting about the blog. The market has been tremendously bullish yet apart from my EADS position (which I'll discuss below) I haven't traded at all. See, in late September I was approached by two firms at the same time, a decent-sized hedge fund and a privately-held equity investment company based in London. Some of the people behind the two firms I've known for years and that's how they "found" me. Basically, I was asked to take a seat on their advisory boards where I would take part in overall strategy and asset allocation decisions.

At first, I didn't know what to think. For almost two years I've thrived as an independant and enjoyed every second of it. I swore I would never get tangled up in corporate life again. Also, if I accepted their offer, what impact would it have on my own operations? A couple of days was spent thinking about it and then I signed on having flown to the City (must admit it was nice being back). Anyway, the pay package and the terms were lucrative and so I said yes.

On to EADS (Airbus is a subdivision of the company) - how about that for a start!? I bought @ 21.60 on 27-Sep and will be looking to add to my position on a meaningfull retracement. What are my arguments for buying a European aircraft maker ?

• The long trend of the market remains up
• The nature and tendency of the aviation industry is sound: basically, it's Boeing, Airbus and everybody else. Demand for commercial airliners is growing at a stellar clip and Airbus expects the demand toward 2025 to be worth an estimated $2.6T. The US remains the biggest market whereas China and India is growing rapidly in terms of available routes and passenger numbers.
• Trend of the selected company's affairs: this is the greatest unknown within the investment case. Certainly, most would argue that EADS is trending toward improvement after more than 18 months of awful performance in the stock price as well as the boardroom (usually, the two go together). The major X factor is the Airbus A380 - the mega jetliner that the company is pushing hard after numerous setbacks. I'm eyeing several key deals recently (like the one with British Airways, see earlier post) and more are bound to come at the expense of Boeing. This week, the latter announced 6 months delays to their newest airliner, the 787. Airbus paid dearly for late deliveries of the A380 and I'm confident Boeing will too in turn making the investment case for EADS that much better.

I'll leave it up to you to judge the management and the earnings potential of the company. Needless to say, I liked what I saw.

Have a nice weekend.