Wednesday 26 August 2015
FTSE struggling to hold 6000...
"A summer blip"
That was the confident tone I head on speaking to friends and associates working in the Banks on Monday this week. The adults were away and there was low volume, allowing hedgies and their algorithms to have their fun by hitting stop losses.
No need to worry, China has a history of the Government interfering in the economy to keep everything on track.
Yet I now note the US markets were not very re-assured by the Chinese panic interest rate reduction announced yesterday. Indeed, the market fell. The FTSE in the UK today is down another 1% and struggling to hold above 6000 points. Indeed, the long terms chart looks like it is ready to make a decisive break up or down - I don't get the feeling that an 'UP' is on the cards right now.
When the Central bank cannot provide re-assurance to the markets through emergency policy then something fundamental is really wrong in the economy. China is an interesting conundrum as it is unlikely to do anything as radical as fall into outright recession. The markets there too have been juiced with retail investors who are being robbed by the professionals as is ever the case and this may make the situation appear worse than it is.
However, I am mildly worried. September is upon us and after that October. It is 7 long years since 2008. These months have a terrible history of igniting the woe in the markets and the economy.
What will happen when the adults come back next week?