Markets
Midweek Musings – late for a reason
Readers who pay frequent attention to their portfolios and the general level of stock markets will have noted , perhaps with some concern, the sharpest sell off in equities for quite a while at the start of the week. Bond yields fell (making bonds worth more), which seems odd given that nearly everyone invited to comment seems to accept that we in for some serious inflation.
The mainstream media put the equity sell off down to concerm about the Delta version of the Covid-19 virus. That was obviously spurious given that the sell off was global and dramatic without there being any really new news on that subject. So there must have been another reason. I decided to wait and see what happened next, having a fairly good idea of what was really going on. That is why this post is a little late.
Watching Brief – July 2021
Pottering About
I have written before about my judgement that equity markets were overvalued at the end of 2019 never really getting tested because the advent of Covid-19 and the response of global governments (ie a huge stimulus of ‘free’ money) created a set of conditions that were way beyond the normal market cycle.
I have argued since that the flow of cheap money and one other factor that I have repeatedly mentioned, the arrival of novice retail traders with new technology at their disposal, has been propelling valuations along for equity shares and some new asset classes like crypto ‘currencies’ and their plethora of proxies.
I think we have seen enough since March 2020 to come to some new conclusions.
Half yearly pause for thought
As inflation rears its head and there is talk of rising interest rates – see next article for some analysis of the direct impact of this – and the Covid crisis is becoming normalised in Western economies, perhaps we should consider the Covid deflection almost fully worked through? Certainly, we must be close to the end of ‘spend, invest and be merry for tomorrow never comes’ era for governments.
Watching Brief – June 2021
Pottering About
Decline and fall?
It is increasingly obvious that we are living at the end of a cycle when it comes to global political systems. But not necrssarily ending in the way we might have expected a few years back.
A long term status quo was first disrupted by the tearing down of the Iron Curtain, fall of the Berlin Wall and apparently successful popular uprisings in Arab and middle European Countries. Even the election of a black president in the USA seemed to offer hope that modern democracy was maturing in a way that would serve citizens rather than exploit them under dictatorships or plutocracies.
Midweek Mashup – Money For Nothing
Global stock markets have reacted as expected to talk of inflation and potential central bank actions but I have already written about that a couple of times. Most markets are around 2% off recent peaks and Sterling has returned to strength after a short pull back. Both these factors will impact the bottom line of our portfolios but only in a way that is part of the normal daily volatility of markets. In my opinion, nothing out of the ordinary, especially in May – remember ‘sell in May and go away’?
In the absence of anything else of significance to investors having come my way recently, I am going to dig into the reasons why things like NFTs (non fungible tokens), Doge coin, neglected old sports cars with worn out engines and even someone’s less than box fresh sports shoes are apparently worth improbable amounts of money – for now.
Midweek Musings – when bad news is good news
Most global stock markets sold off heavily yesterday, the explanation being that inflation risks are being trumpteted by all and sundry now, even the US Treasury Secretary. I have already outlined my reasoning as to why I don’t think central banks will actually raise interest rates sharply, or if they do why it won’t hold back equity valuations in the medium term (Digging Deeper, in the May Watching Brief)
The bad news?
A market sell off is bad news insofar as the figure at the bottom of our portfolo valuations is now less than it was on Monday. Surely, inflation is bad news too? That is why governments and central banks want to control it?