Market Commentary

“Aging seems to be the only available way to live a long life”- Kitty O’Neill Collins. (US Author).

“Those who are easily shocked should be shocked more often.” ― Mae West I wrote a blog piece 18 months ago, looking at the possibility of Jeremy Corbyn winning the next General Election. It seemed daft at the time, but if recent history has shown us anything, it is that shocks are the new normality. Corbyn has claimed “victory”, (which given the shortfall in Labour seats relative to the Conservatives does raise concerns about the future course of the economy under his leadership), but in truth, it was the Conservatives who “lost it” (in both senses).…

“In April, May announces election in June”- tweet from Ivan the K 18/4/17. It is debatable whether the population of Britain really wants this, but we are heading for an Election (the third in two years); With almost perfect comic timing, the IMF announced an upgrade to the UK growth forecast on the same day! The immediate response was a fall in Sterling to $1.2515 followed by a sharp reversal to c.$1.29. Sterling has risen, as opinion polls suggest a Conservative majority of at least 90 seats (and possibly as much as 200). This is what happens when record levels of shorts meet news…

Just as with Carlsberg, we don’t do predictions at EBI, but if we did they would probably be the best in the World… I am sure you have already had your fill of predictions for 2017, but just in case you haven’t here are some more, but with a slight twist – these are the opposite of the consensus view, taken precisely because of that fact. Call it a control experiment – how right can one be simply by saying the opposite of the pundits? We shall check back in approximately 350 days… 2016 was a normal year in most senses – pundits got it wrong, as usual, but this time the magnitude of failure was spectacularly large: not just the puditocracy though. As the screenshot below shows the Bookies got it badly wrong too, and it cost them real money.

“We have long felt that the only value of (stock) forecasters is to make fortune-tellers look good.” Warren Buffett. There are lots of predictions out there already for 2017. In order to have a fighting chance of being right, I will focus on 2016 and look at the events that shaped what turned out to be an “interesting” (in the “Chinese” sense of the word) year. In no particular chronological order, the “main events” appeared to wrong foot all and sundry – It was not a good year to be a pundit.

“People who think they know everything are a great annoyance to those of us who do”. Isaac Asimov We return to the subject of Oil. The recently agreed OPEC deal to freeze output has finally stopped the rot, pushing prices back up above the $50 per barrel level, to much relief all round (the Saudi’s, Russia and US Shale producers all stand to benefit handsomely from this development – it may even allow Venezuela to survive another year!). The chart below shows the extent of the gains since the low point of January/February 2016. The question is now about its duration – can the deal stick, or will the cartel resume its policy of benign neglect, leading once again to over-production and falling prices.

[The events of Tuesday/Wednesday has necessitated a substantial re-write of this blog – once again, markets have been wrong-footed by a massive underestimation of public mood. If it reads as if I am gloating a bit, it is because I most definitely am]. Where’s my boy @JebBush at? Clinton’s and Bush’s finally kicked out of politics. Phillip Taylor tweet 08.48 am. 09/11/16.”They would not listen, they did not know howPerhaps they’ll listen now.”Don McLean – Vincent Before the result on Tuesday, I found the following screenshot – notice anything similar? …