Investment Markets Overview — W/E 13th January 2017

“Big Mac Index”…. Is a measure of purchasing power parity between two currencies, published by The Economist magazine, which in theory tests an exchange rate based on the price of a “big mac hamburger,” sold across different countries. It was introduced in 1986 and is obtained by dividing the price of a Big Mac in one country (in its currency) by the price of a Big Mac in another country (in its currency). This value is then compared with the actual exchange rate; if it is lower, then the first currency is under-valued (according to PPP theory) compared with the second, and conversely, if it is higher, then the first currency is over-valued. As an example, a big mac in America was priced at $5.06 this week, according to the magazine, whilst in the UK it was $3.73, giving an exchange rate of $1.36 rounded versus the spot rate of about 1.22. Thus in theory the Dollar is overvalued, or the British pound is undervalued OR maybe it’s a bit of both? Either way, there will be a lot more comment on currencies this year, as it is there and within the bond markets that the credit fault lines are growing and is why www.currencytiming.com has been introduced.

 There was certainly some clarity on just what “the Donald” thinks of the press and the intelligence services, or should one say parts of it, plus a far more transparent attitude towards geo-political affairs, trade and for business in general. For students of the markets, last week it was autos and this week big pharma:

13-january-17

Subscribe to the Full Investment Markets Overview Newsletter which contains the following:-

Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

 Returning to the “Big Mac Theme,” whilst Burgernomics was never intended as a precise gauge of currency exchange rates, due to factors such as labour costs in each country, the McDonalds restaurant chain can provide  ……

Charts:
1.  Indices Weekly
2. US Consumer Credit V US Business and Consumer Confidence
3. UK  Retail Sales V UK Ave Wage Growth
4. China GDP V China Copper Consumption & Copper Price
5. Commodities Weekly

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

       “Trump is proud of his Scots ancestry, so perhaps we should call him the Big Mc”

Click Here to view Details of the full version of this Newsletter which includes full text and detailed

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: