Previously on Sharpfokus
3 data stories 🔢 Sharpfokus101
July 30th, 2019
⏰ 2 minute read
⏰ 2 minute read
Data
At sharpfokus we keep data. A lot of data. It’s not that difficult to find this data, it’s available for free all over the Internet. But, it takes a bit of time to convert it from the pdf files which it normally sits in into spreadsheets which you (if you subscribe) can download. Here’s 3 related stories from some of the recent data.
US GDP
Slow
The first is about US GDP data. We always use nominal GDP data as that is both real in that it’s the data which is collected & it’s directly related to stocks as the data comes from companies like those listed, US GDP data has come out for the 2Q & the most up to data data we have. It shows a slowdown.
Bonds
The US economy began to accelerate from late 2016 with growth rising from just 2% to an impressive 6% by the 2Q last year. This the began to slow & had fallen to just below 5% in 2Q19. The pattern of US economic growth exactly matches their 10 year bond yields which makes the bonds an almost perfect leading indicator.
Fed
This weakness, coupled with the fact that 2 year yields are about 0.7% below the Fed funds rate which is at 2.5%, means we are now about to get rate cuts from the Fed. The question is how much? Given the gap with market rates, it’s likely to be bigger than expected. The Fed should probably just cut by 1%.
Indonesia GDP
Flat
This brings us to Indonesian GDP growth, also in nominal terms. We are still waiting for our 2Q which will come out by mid August. The pattern of growth has some similarities with the US, but did not rise much after 2016 & has been slowing faster since 2017. The rate of our growth is flat & almost the same as mid 2016.
Catching
We are falling towards the same growth rate as the US. In 2016 we were 7% vs their 2%, as of 1Q we are just under 8% vs their 5%. Of course in $ terms our growth has even been negative. It seems likely that in the 2Q our growth gap with the US will narrow still further & might even fall below.
BI
This means whatever the Fed does in the US, Bank Indonesia should be doing double here. So if the US now cuts their benchmark interest rates by 100 basis points, Indonesia should cut by 200. If you’ve been reading in recent months, you know we think our rates will fall towards 0%.
Saham
Receipts
The third data story is about our coverage of stocks & the data which that gives us. Nominal GDP is sales, so we’re comparing the macro data with the sales of the 30 companies we’re covering. As our focus is cash flow we’re viewing the sales through receipts from customers in operating cash flow.
Volatile
You might not be surprised to see the corporate sales is more seasonal than macro economic data. The growth of receipts held up better than GDP during 2017 & the beginning of 2018 before catching up dramatically at the end of last year & crashing in 1Q19 even before the holidays. Like GDP, growth, receipts has fallen back to 2016 levels, & below to just 3% annual growth.
Rebound
Just like in 2016, the growth of corporate sales has tumbled way below the economic growth rate. This means that even while GDP growth will likely slow in 2Q, company results should start to show some improvement. Maybe not much & maybe a disappointment to the market, but an early sign of a corporate recovery coming in the second half of this year.
Sign up
The corporate recovery in Indonesia will be emhanced by what is likely to be deep rate cutting from Bank Indonesia. The data is going to look quite weak, as growth is very weak. But the outlook is getting better & better. We will update how this play out through Sharpfokus, but if you’d like to get your hands on all the data,... sign up for Saham.
Be a great investor!
Sebastian
At sharpfokus we keep data. A lot of data. It’s not that difficult to find this data, it’s available for free all over the Internet. But, it takes a bit of time to convert it from the pdf files which it normally sits in into spreadsheets which you (if you subscribe) can download. Here’s 3 related stories from some of the recent data.
US GDP
Slow
The first is about US GDP data. We always use nominal GDP data as that is both real in that it’s the data which is collected & it’s directly related to stocks as the data comes from companies like those listed, US GDP data has come out for the 2Q & the most up to data data we have. It shows a slowdown.
Bonds
The US economy began to accelerate from late 2016 with growth rising from just 2% to an impressive 6% by the 2Q last year. This the began to slow & had fallen to just below 5% in 2Q19. The pattern of US economic growth exactly matches their 10 year bond yields which makes the bonds an almost perfect leading indicator.
Fed
This weakness, coupled with the fact that 2 year yields are about 0.7% below the Fed funds rate which is at 2.5%, means we are now about to get rate cuts from the Fed. The question is how much? Given the gap with market rates, it’s likely to be bigger than expected. The Fed should probably just cut by 1%.
Indonesia GDP
Flat
This brings us to Indonesian GDP growth, also in nominal terms. We are still waiting for our 2Q which will come out by mid August. The pattern of growth has some similarities with the US, but did not rise much after 2016 & has been slowing faster since 2017. The rate of our growth is flat & almost the same as mid 2016.
Catching
We are falling towards the same growth rate as the US. In 2016 we were 7% vs their 2%, as of 1Q we are just under 8% vs their 5%. Of course in $ terms our growth has even been negative. It seems likely that in the 2Q our growth gap with the US will narrow still further & might even fall below.
BI
This means whatever the Fed does in the US, Bank Indonesia should be doing double here. So if the US now cuts their benchmark interest rates by 100 basis points, Indonesia should cut by 200. If you’ve been reading in recent months, you know we think our rates will fall towards 0%.
Saham
Receipts
The third data story is about our coverage of stocks & the data which that gives us. Nominal GDP is sales, so we’re comparing the macro data with the sales of the 30 companies we’re covering. As our focus is cash flow we’re viewing the sales through receipts from customers in operating cash flow.
Volatile
You might not be surprised to see the corporate sales is more seasonal than macro economic data. The growth of receipts held up better than GDP during 2017 & the beginning of 2018 before catching up dramatically at the end of last year & crashing in 1Q19 even before the holidays. Like GDP, growth, receipts has fallen back to 2016 levels, & below to just 3% annual growth.
Rebound
Just like in 2016, the growth of corporate sales has tumbled way below the economic growth rate. This means that even while GDP growth will likely slow in 2Q, company results should start to show some improvement. Maybe not much & maybe a disappointment to the market, but an early sign of a corporate recovery coming in the second half of this year.
Sign up
The corporate recovery in Indonesia will be emhanced by what is likely to be deep rate cutting from Bank Indonesia. The data is going to look quite weak, as growth is very weak. But the outlook is getting better & better. We will update how this play out through Sharpfokus, but if you’d like to get your hands on all the data,... sign up for Saham.
Be a great investor!
Sebastian
