Markets

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Why Dow at 20,000 points is meaningless

Crossposted from The Conversation Jay L. Zagorsky Economist and Research Scientist, The Ohio State University   The Dow Jones Industrial Average just broke 20,000 for the first time. Traders and investors cheered this historic high of the world’s most famous stock market index, which is composed of 30 of the biggest and best-performing American companies

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US stocks: only good for the short run

As a new golden American oligarchy begins in the next couple of days, it’s timely to note the huge rise in US stocks since the outcome of the election: And with promises of tremendous fiscal stimulus through increased defence spending and other pork barreling, not including corporate tax cuts and barriers to investment in non-renewable

6

The wonderful world of broker conflicts

A reminder today from Reuters on the perils of being a research analyst at a brokerage firm. The guts of the story: JP Morgan equity strategists downgrade Indonesian stocks to underweight The Indonesian finance ministry takes offence and stops using JP Morgan as a primary dealer for its government bonds JP Morgan upgrades Indonesian stocks

1

Asset Allocation and the Trump border tax

Here’s some more on border taxes from the FT, following up on my rundown yesterday on Trump’s effect on taxes. The FT are invoking JP Morgan (JPM) to show which countries and stock markets are most exposed: JPM then go on to draw some conclusions based on ETF flows: It is of course almost certain that

12

Evaluating Trump’s corporate tax scattershot

There are a number of elements to Trump’s tax plan. Most of it involves cutting taxes on the richest and hoping that “trickle down” will sort everything out. I don’t think there will be a happy ending to that story. However, the tax plan is more complicated than that, especially at the corporate level –

12

Pound dumped on hard Brexit

The biggest move in currency markets over the weekend, and this morning as Asia wakes up, is Pound Sterling gapping down nearly 200 pips against USD: And on the crosses, particularly against the Australian dollar: This has been a swift reversal from a recent surge in the once-favoured currency, but watching this as part of

3

Can the US stock rally continue?

From Chris Weston at IG, The US financials space will get attention above all other sectors this earning season, not just because the analysts’ consensus is for earnings-per-share growth of 21.5%, but because for those more macro-focused traders, what CEOs say about the potential for a further boost to net interest income (from a steeper

16

Will Trumps fiscal boom be a fizzer?

All risk markets have and continue position themselves in preparation of a super fiscal boom emanating from the Republican controlled Congress in the first term of Donald Trumps Presidency. And why not – he has promised the wall, I mean the world in terms of infrastructure spending, repatriation of US industry, and huuge tax cuts

5

Markets have priced in rainbows but no rain

There is a lot of sunshine and rainbows in economic stats recently: Morgan Stanley’s leading trade indicator: Consumer confidence is generally up in the US:     And in Europe:     With US construction still strong:   The dark clouds? Not many. Rising interest rates and a rising US dollar choking off any recovery

5

Buy US financials on Trumpflation?

  by Chris Weston, IG Virtually every research house has a ‘buy’ or ‘outperform’ call on the US financial sector and most feel that if we are genuinely going to see better growth and inflation under a Trump administration then there is no better sector to own than financials. Clearly this view is already playing

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Speech impediments and predicting the unpredictable

My favourite Economist section, The Technology Quarterly recently came out with a focus on voice recognition. The key reason for the focus is that Microsoft Switchboard reached a 5.9% error rate – which is the same error rate as a human transcriber and considerably better than the average offshore call centre operator I’ll bet… There are

23

Are the Olympics sucking the volume out of markets?

by Chris Becker. I don’t watch the Olympics, not because I don’t watch commercial TV, but because they raise jingoism and corporatism high above individual achievement, amid rampant corruption and graft  – and don’t get me started on those absurd medal tallies! But my minority view aside, it looks like another impact is the lack of trading volume in

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Markets poised as US jobs report looms

  by Chris Becker Outside of Australia, markets have been moving sideways and shuffling waiting for the monthly employment stats to be released tonight in the United States – the nonfarm payrolls or NFP. This is the most important event on the economic calendar, as the strength of job creation is critical to the Federal

3

US stock boom is running out of puff

Although most will consider this week’s monthly meeting of the Federal Reserve as a non-event, it must be reminded that it coincides with the two year anniversary of the second longest ever bull market in US stocks history. At just over 2600 days, it will surpass the post WW2 to mid fifties boom, but still

21

Why is stock ownership falling?

An interesting divergence is occuring in stock markets as they reach ever higher levels, imbibed by helicopter money and/or century low interest rates, the ownership of those stocks is changing. Aside from the near complete crowding out of the volume – most of which is now done by robo-traders by only a handful of institutions

7

Yuan fix stable as calm returns to markets

The last fix of the week is in and the PBOC has continued its “steady as she goes…under” mood, with the mid-point set at 6.5572, slightly lower than yesterdays 6.5582 Chinese stocks look set to open up 1-2% while its all good in Japan, with the Nikkei up 3% On Australian stocks, the ASX200 is

20

Funds hold most cash since GFC

Is the bottom in? One of the greatest contrarian indicators during bear markets is when the “professionals” move to cash, and the latest Global Fund Managers Survey has current cash levels at their highest since the 2008 top: Early days yet but the ASX200 was up nearly 2% on the open as Yen weakened and Aussie

47

Understanding bears, bulls and clowns

Its not the end of the world folks. Headlines regarding market carnage, ridiculous bets between economists aside, you just need to print out this chart, lay it on the floor, stand on your desk and look at it: This is the S&P Composite stock index, taken back to 1900 and deflated by CPI, correctly displayed

2

Volatility is getting volatile

So far in 2016, most stock markets have lost in a few days what they normally gain over a year, highlighting the old adage that stocks go up a flight of stairs, but fall down an elevator shaft. Fear and Greed. Hasn’t changed even with HFT and algo’s. John Kicklighter from DailyFX has an interesting

2

Will buy the dip work in 2016?

Given Friday nights stonking non-farm payroll (NFP)/unemployment print from the US, comes this interesting chart from CLSA showing a correlation between the monthly print and the YoY change in the S&P500: Anyone who has observed markets since the GFC knows how much emphasis is placed on the monthly jobs number, setting the gauge if not

20

Should China stop its stock market crashing?

Yesterday was another short day for Chinese stock traders as trading was halted on the main exchanges less than half an hour after opening with falls in the 7-8% region: Put the falls into perspective though as the Shanghai Composite launched itself from ca. 2000 points to over 5000 points in less than a year:

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Bitcoin won the 2015 battle of the currencies

But can it win the war? Here’s what happened last year, according to The Money Project: Using the benchmark of the U.S. Dollar Index, a comparison against a basket of major currencies, the dollar gained 8.3% throughout the year. Despite this strength, the best performing currency in 2015 was not the dollar. Bitcoin, a digital

6

Macro Morning (steady as she goes)

 by Chris Becker Calm descended on most risk markets overnight as the fallout from the NY day volatility on Chinese equity markets started to dissipate. A small bounce on stocks in Europe and the US was extended into slight gains on bond markets, but commodities were mixed as oil dropped but precious and industrial metals gained.

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Apple is starting to smell a bit

News earlier this morning from the Nikkei Review that iPhone 6 production from Apple may be cut up to 30% in the first quarter: Apple is expected to reduce output of its latest iPhone models by around 30% in the January-March quarter compared with its original plans, a measure that will deal a blow to