Monday 4 January 2016

New Year, New Crisis

So a stock market fall in the first week of the new year, is a very common occurrence.

In December, Fund Managers and Hedge funds load up on stock with their spare cash, this drives up equity market and helkps them to hit their targets for their bonus's for the year; hence the term, Santa Rally.

At the end of 2015, this was more muted, as world events meant that shocks aplenty abound and even manager desperate for bonus' don't want to be loaded with stocks that fall in value.

The flip side fo Santa rally is that Fund managers sell in the first week of January ever year, book some losses and then take on cash which they can play with for a whole year - the losses they have some time to make up and their all important bonus' are paid in Feb on last years results.

However, could it be different this year? The markets are very wobbly in China, where a real terms recession is underway in many industries while the property market bubbles away agin, and also macro problems in the Middle East (as per the whole of recorded human history, 'tis true) are not going away. Hence a rather sharp 2.5% sell off on the FTSE this morning.

That is much more of a crash than usual and sets the index up for a tough year already, off the back of what was a losing year last year. With US interest rates rising and weakness continuing in commodity markets, there will be a lot of downside risk on the FTSE in the first quarter at least.

It is not a very happy share buying environment unless you want to try high risk pharma companies that seem to have replaced E&P oil companies as the high risk, high reward AIM bets.

It will be an interesting year.


My2016NameAThustra said...

Chinese in the Gulf/Yemen is what we're waiting for.

The Saudis are being sold to the highest bidder, I'd imagine that the yanks will ask for something in the far east in return - North Korea? Retreat from the SC Sea claims?

Unless India can put in a higher bid, the Gulf resources belong to China, Russian resources to Europe............ and what to the Americans? Self-sufficiency. How apt.

If this goes wrong,the escalation will occur in not the middle east but in the SCS. I'd give this 6 months. If there is no resolution we will have a China/US standoff in the SCS by mid-year.

Stock markets sidewards on the usual bullshit for 6 months then... who knows.

Russia trapped between collapse and mid-east war is a no-brainer. Gay Dave and his motely crew of bum boys are going to get owned here. "I'll show you my 4 Tornados if you show me your mobile-armour ground-attack into western europe" might sound good in the bum-loving Oxbridge circles, but it will not wash with the electorate.

Brother-Lesbian-Immigrant-#1 Korbyn has the right approach........ Well, I guess a stopped clock is right twice a century

So spake My..Name-A-Thustra

Nick Drew said...

well, Mr Thruster, but isn't it interesting how clumsy China is in its own back yard? Logically, if anyone should be owned in this world it is poor old Oz & its bountiful resources, by China

and yet Xi heartily pisses off everyone with a beach on the W.Pacific, making them all cosy up to the US when they should be lining up with him: does he do it for fun? for the exercise? in the belief you don't need friends?

my continual refrain: how long will it be before they learn how to wield their power to proper effect?

BE said...

I hope Saudi/Iran stays a cool war, as it might spur on a bit of competition between them and maybe even some reforms without turning the desert into glass. Oil prices to bounce around and then fall back.

Anonymous said...

Do you think that the execution of Sheikh Nimr al-Nimr maybe the Black Swan event of 2016 already?

CityUnslicker said...

No to Nimr Nimr - The iranians will not do something crazy to delay the ending of sanctions.

The saudis are a freaking because they are going to have to devalue the Riyadh soon so are making sideshows for domestic consumption - plus they lost control of ISIS.