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.
Last week’s imposition (taking effect this week) of the Bank of Japan’s negative interest rate policy, could represent the last throw of the dice for central banks. The premise is that savers are to be so heavily punished for so doing that they feel compelled to spend money to avoid paying interest on their savings. Central banks appear to have run out of ideas, and are resorting to one that cannot work. If one is living off savings, and rates are negative, one will be more likely to save yet more, to avoid future impoverishment. Of course, this policy has been in operation for a while in Europe and one has to wonder for whom this policy is being enacted. One economics professor thinks he knows; the chart below may also provide a clue:[Disclaimer: I have always wanted an excuse to show this chart]
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.
[The title of this blog is penned with apologies to Edwin Lefevre, the writer of what is possibly the greatest book on the stock market ever written] In February next year, I shall have worked in stock markets in various guises for 29 years, and will have to up-date the bio below. In the meantime, in what will be our last blog of 2015, I shall attempt to describe the similarities that have endured and the differences that have emerged in that period. It is by no means exhaustive, merely a personal account of what it was, and is, like to work in the City of London.
Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset’s price
Events in Europe appear to be moving in a decidedly dangerous direction. The initial huge sympathy for the migrants has given way to concern (and in some cases alarm) amongst the local populations. From welcoming refugees unconditionally a few weeks ago, Angela Merkel has changed tack, limiting their “rights” and preventing further inflows (as far as possible). This puts them on a par with the likes of Hungary, Croatia, Slovenia and others who are actively seeking to offload the problem to others. Meanwhile the EU itself, according to the Washington Post, predicts<
ZIRP- Another Japanese innovation, this time from the Bank of Japan, whose aim was to stimulate the Japanese economy by having a Zero Interest Rate Policy: so far (15 years and counting), it has had an extremely limited effect. NIRP- A variation on the above theme, whereby Central Banks (particularly the ECB, but not limited to them ) employ a strategy of Negative Interest Rate policy: the likely economic result will be much the same.
