The Investment Club

11/02/2016

Lets give an updated look to how the relationship between world stocks (purple line) and commodities (blue line) has evolved since the last dedicated post on December 7th 2015. One thing we can see is that the decline in stocks has now lasted for 6 months, the same amount the 2011 bearmarket lasted and about one third of what the 2007-2009 bear market did. An important difference however can be noticed from the fact that previous bear markets have been precceeded (see december 7 post) by steep rises in commodities, whereas this time i would dare say its the exact opposite, the downturn has been precceeded by an acceleration of the fall in commodity prices. Now two questions must be posed: What's different this time? and is this time better or worst?

09/02/2016

EUR/USD seems standing between a resistance at 1.15 and a support at 1.05 until central banks don't decide to change the game it might be possible to make a few bucks on this seesaw. FOMC next MP meeting March 15-16
ECB Next MP meeting March 10

05/02/2016

Its been a tough time for whose in the Investment Management profession... Here are two interesting funds 2015 4th quarter reports ... That give some insights on what hedge fund managers are going through and what they think or at least want their investors to think is happening. Enjoy the read ...

https://www.dropbox.com/s/nmhp4bu8fr5j83v/Q4%202015%20Commentary_FINAL.pdf?dl=0

https://www.dropbox.com/s/nmhp4bu8fr5j83v/Q4%202015%20Commentary_FINAL.pdf?dl=0

Shared with Dropbox

18/12/2015

The Business Cycle and sector rotation are something we should always be aware of when interpreting what happens in the markets ... if you want to know more i found an interesting page by Fidelity here it is https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/si_business_cycle.jhtml?tab=sibusiness

Research the performance of U.S. sectors & industries. Find the latest news, analysis reports and Fidelity insights on specific sectors or industries.

07/12/2015

Once every few months I always feel like its a good exercise to zoom back, set your graphs to monthly data, and look at the big picture. Today I played a little comparing the Global Stoxx 600 Index (green line) and the CRB commodity index (light blu line-area). Commodities have had in the past a negative correlation to stock markets, since China has started fueling both western economies and commodities markets, however, this correlation has become slightly more foggy, but it remains evident as we can see both the 2008 and 2011 economic recessions have been preceeded by steep rises in commodity prices. Furthermore, since the end of 2011 commodities began a new steady down trend, and stock markets a steady uptrend re-establishing a clear negative correlation. One day in a month a year or myabe a little more I expect to see commodities and stock performance coverge once more and I will know that something is changing. There are many strong balances and relationships that can warn us that the big picture is changing. This is just one of them... hope you find it interesting!

03/12/2015

It seems to me that financial markets expect central banks to give them free money just because they ask for it.... Well Draghi's stance during today's conference meeting, in my opinion, was the right one to bring expectations where they belong. Central banks increase stimulus if the stimilus they have used untill that point has proven to be not enough, but if it is working why change stance? why ease further? to buy a free lunch to speculators? of course not. Does this mean we won't see anymore growth in the stock markets in the coming future? Well maybe in the short term, but if measure taken are really working and are enough then we sill soon see the results and markets will respond coherently. Otherwise only then will new stimulus arrive. Enough with supporting bad news being good news for markets and good news (i.e. policies are working) meaning bad news for markets....

C.C.

01/12/2015

Help the conversation.... Is there a specific topic you have been wondering about? Something you have been working on and need a confrontation? Or simply want to ask something you would like to see on the page more often ? Please comment this post !

06/11/2015

After the last FED meeting expectations about a rate rise in December increased putting upward pressure on the dollar. While ECB president Draghi reiterated in the October meeting that the ECB remains committed to its easing policies until further improvements in the European economies emerge. Today strong employment data from the US strengthened this theme pushing the dollar to new lows vs the Euro. Will euro/dollar parity be tested soon again?

19/10/2015

Finally some news out of China! GDP slightly above expectations and data showing a continuing growth of Services "Yet real GDP growth from services rose to 8.6 per cent in the third quarter, up from 8.4 per cent the first" (Financial Times 19/10/2015) Commodities and industrial sector shows no signs of improvment for now, but thats in line with most expectations of a continuing structural change within China. Now its up to you to figure out who will gain and who will lose in this developing environment! Check out more data at: half.http://www.tradingeconomics.com/china/gdp-growth

The Chinese GDP expanded a quarter-on-quarter seasonally adjusted 1.8 percent in the third quarter of 2015, the same pace as a downwardly revised expansion reported in the June quarter and slightly above market consensus. GDP Growth Rate in China averaged 1.90 percent from 2010 until 2015, reaching…

14/09/2015

As commodities continue to slump it becomes an interesting excersises to see what are the effects on companies that see their costs lowered. http://www.wsj.com/articles/starbucks-raises-prices-despite-declining-coffee-costs-1436205612

Starbucks is raising prices slightly on some of its beverages to cover rising costs including wages and rent, even as prices for raw coffee have been falling.

11/09/2015

Do you listen to podcasts? Well you should, a lot of interesting ones out there! I have been listening to one for a while and it has some great insights...
As always one word of notice, never take what you hear for granted, always challenge it and reason through it. Enjoy

https://itunes.apple.com/it/podcast/money-for-the-rest-of-us/id883011006?l=en&mt=2&i=351789709

Download past episodes or subscribe to future episodes of Money For the Rest of Us by J. David Stein | A personal finance show on money, investing, the economy, retirement, and wealth. The world explained like on NPR: Planet Money, Freakonomics Radio, This American Life, Radiolab from WNYC, Suze Orm…

22/08/2015

The Euro/Dollar flirting with a reversal as the FED still unclear on rising rates