Its Not Harry

Comment and opinion for retail investors in the UK

Trading

Watching Brief – June 2023

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Pottering About

No result yet in the market tug of war

The market moves up and down at the moment as it reacts to conflicting data

As I started to write this month, at least one potential crisis had passed with an outcome that markets will find acceptable.  The US politicians have reached an agreement (subject to Congressional approval) on funding the US public debt for a full 2 years more.

Bad news is the fact that the war in Ukraine is building up to a critical point and we cannot know what the consequences will be.  Plus, a welter of news from China suggests that it has economic problems on a scale not anticipated and which the Chinese Communist Party (CCP) may have trouble managing.

The push me/pull you trading in markets that we have seen this year is further sustained by the news that recessions might be avoided in some developed markets (good) but that means interest rates will stay higher for longer (bad).

For once there is some genuinely good news about a major business, which will be owned by many funds popular with readers, doing exceptionally.  This is Nvidia, the tech company set to benefit hugely from the rush to invest in AI.  It is looking like another Tesla for the moment, which means it will likely end in tears, but we can hope our fund managers will ride the bandwagon and book some profits.

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Midweek Musings – and they’re away!

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The heading is a horse racing reference. We are now one month into 2023 and it is possible to see how the runners and riders are positioned at the first hurdle/bend in the track.

You will recall that I have so far this year pointed out that we started the year without a clear case for adopting either a positive or negative attitude to equity markets; that fixed income funds with longer duration looked like a no brainer, and that the case for returning to China for equity growth was being made without wholly convincing me.

Some market data

This chart is courtesy of one of my subscribers, Eugene. It suggests that all the main equity markets had a decent start to the year but that China has really flown since November 2022 – the end of the Covid lockdowns. The US (in Sterling terms) was the least profitable place to be invested. Note carefully the relatively short time period when thinking about this data. Also note that the UK All Companies sector will not reflect performance of UK value or contrarian funds over the last year or two.

[Read more…] about Midweek Musings – and they’re away!

Only fools and horses (and meme stock buyers)….

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A storyline

Delboy Trotter is in the pub with the usual crowd. He is bragging that he has just acquired 500 units of the latest computer gaming toy (the Mistboard console to be precise) that is going to be massively in demand and is in short supply due to global ‘logical’, as he puts it, (logistics) difficulties, retailing at £125 a pop. He only paid £100 a unit and they are already being touted on Ebay at £150 plus. The discussion moves on.

A week later, Del is back in the pub and blathering on about the same subject. The dudes ‘in the know’ reckon that the computer gaming console he stocked up on is going to be selling for at least £250 by Christmas because a container load of them fell off a ship coming out of Taiwan and 200,000 units were lost.

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Midweek Musings – diverse opinions

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A surfeit of material

When I comment on markets with a view to distilling those factors that will help you assess the probability of various possible future trends, what you read is all my own thinking, although it is influenced by the wide range of infomation and commentary that comes my way.

One resource I continue to have on hand is what used to be called the trade press. This is of course delivered electronically these days but it still has the feel of a specialist newspapers such as are issued to all professions, whether it be in a form as grand as the BMJ or Lancet for doctors, or The Caterer for those is the, well, catering profession. Trade papers tend to have obvious names so mine are called Investment Week, Professional Adviser and so on. One Citywire publication used to be called New Model Adviser, now shortened to NMA, but such Cromwellian overtones are rare!

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Midweek Musings – to buy or not to buy, that is the question

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With the truly horrific Putin’s war continuing to destroy Ukraine and kill hundreds of civilians, soldiers on both sides and sending Russia’s world status back to the Stalin era, it is difficult to think objectively about matters of as little consequence as the value of electronic vouchers for money.

But obviously, we must.

More of this?

The general state of global equity markets this week could be described as ‘stabilised’. Markets particpants in both the equity and fixed income markets are now able to make some judgements about the likely impact that Putin’s war will have on world order, although any such assessments will be assuming the war does not escalate outside Ukraine, either to NATO member counries like the Baltic states and Poland, or to other former Soviet Union outposts like Serbia and Moldova.

My personal asssessment of the economic consequences are that the reduction of food, energy and other primary goods coming to the market, plus the potential shock of a major Covid 19 outbreak in China (which will reduce suplies of manufactured goods) will together make the problem that triggered the end of the long bull market in November 2021, that being a fear of runaway inflation, that much worse.

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