Market Commentary

A new phenomenon of the 2000s and beyond has been the rise of Financial Television. As the markets have soared, so has interest in them, to the point where even Channel 4 news (not an outlet known for its pro-capitalist views), now feel compelled to announce how stock markets have done that day. Meanwhile, at Bloomberg TV, CNBC, Fox Business News etc, they maintain a hectic pace, often spending as long as 3 minutes covering in depth the latest news stories of the day (hour?), and discussing economic issues with all the gravitas they can muster. One of the first casualties in all this is thought, which they replace with cliches of varying vacuity. Below are some of the best (or worst, depending on your view). 1): “China will have a Hard/Soft landing”. It is by no means clear how a country can get airborne in the first place.

“If you want to know what God thinks about money, just look at the people He gives it to.” – Dorothy Parker [This post was prompted by a discussion with an Oil- industry employed client, who was speculating on the motivations behind the Saudi policy on production etc. and what it meant for the future price of oil. We thought it worth weighing in on the subject, as the oil market is still one of the most important cost inputs into economic decision-making, and thus growth] The oil market continues to confound expectations. Since the low point in mid-February, it has risen nearly 40%, leading some to call the oil bear market over. This may prove to be premature however.

[Update: in a further sign of the Elite trying to “steer” opinion, the British Chambers of Commerce have announced the suspension of it’s former Director General, John Longworth after he voiced pro Leave views. The Government have denied putting pressure on the BCC to remove him. When an official denies something, it is normally a sign that it is true]. Your imagination is your preview of life’s coming attractions.

Monkey killing monkey, killing monkeyOver pieces of the ground.Silly Monkeys, give them thumbsThey make a club and beat their brother down.”Right in Two”- Tool Things appear to be hotting up in the Middle East once again. The European refugee crisis has focussed attention on the on-going civil war raging in Syria, and the potential for escalation in fighting if the Turks and the Saudi’s get drawn into the battle for control of the country.

Everyone has a plan ‘til they get punched in the mouth. – Mike Tyson Analysts have got off to an inauspicious start in 2016: “The current stock market level is disconcertingly well below not just the Wall Street forecasts for 2016 (made a couple months ago), but also below those made for 2015… or for even 2014!” (via Zero Hedge). All investors, including those in EBI Portfolios, have taken a bit of a beating recently. Nearly everything has fallen sharply in the last six weeks, and equity market correlations are once again approaching one, as the table below highlights. …

The last month or so has seen a gut-wrenching fall in oil prices (and most asset prices in general). Declines so far have been (relatively) orderly – a 5% move for oil for example is par for the course – but some strange things have been happening in ETFs and ETNs . They should trade at fair value – that is, at a zero premium to the value of their assets. If they didn’t, there would be an opportunity for risk-free profits (known as arbitrage). But, as this Barron’s article relates, this has not been happening. First, let’s remind ourselves what an ETF is and what it does…

A fanatic is one who can’t change his mind and won’t change the subject. – Winston Churchill OK, I know I have covered this before (here), but in the cacophony of market forecasts arising from the brokerage industry, and dutifully repeated by the financial media, I feel the need to purge myself of the temptation to listen to them. (This may be a form of therapy – bear with me.)…

The new year has not started brightly – geopolitics in the Middle East, literal rumblings in North Korea and the chaos in Chinese asset markets has put equities on the back foot. The real concerns, however, may lie elsewhere.