Oh, so many questions ..... a quick look at just three of them ref :- Market Questions , the Financ

Its good of the FT to highlight some of the issues of the day ..... we can check that we're at least vaguely "au fait" with some of the things that matter to markets. Of course definitive answers to their own questions are not on offer but certain possible outcomes are suggested, some of them more concerning than others. More bond market pain for China's equity investors ? Recent weakness in Chinese equities is catching plenty of attention ..... the CSI 300 index, a composite of stocks from Shanghai and Shenzen and currently in fashion as THE indicator to follow, suffered its largest one-day fall for 17 months last week and continues on the defensive. Any minor correction will have the bulls

SPECTACULAR !! ........ (and absolutely terrifying ) ref :- "Bitcoin Guns for $10,000 as Crypt

On the move today so was going to pass on the blog entirely but in the event we felt that we just had to make sure that you'd clocked what's going on with Bitcoin, especially as we had made a rare foray into cryptocurrency territory last week. Just briefly, Bitcoin traded as high as $9,747 this morning. If you take Friday's close at somewhere around $8,264, that's a rise of well over 17% over the weekend. Crazy stuff ..... Japanese exchanges have been inundated by speculative buyers apparently. Why ? Well, for a start "bandwagon" events like this create their own momentum, for a while at least. But there are some fundamental reasons behind the move. We use the word "fundamental" cautiously,

"Run your profits, cut your losses" ..... there's been a whole lot of cutting going on

With almost another week to go in November, you might think that it's a bit premature for institutions to start broadcasting their predictions for 2018. Nevertheless, it's starting ..... an obligatory annual ritual and a pretty unwelcome one for many of the experts it must be too. Frankly, on balance and for the majority, the track record is poor. So much so in fact that you sometimes wonder why they bother. As much as anything else, it's a marketing exercise of course ..... you've got to get your name out there ; and if your predictions happen to be wrong ..... well, there are always plausible explanations. Those unfortunate enough to be forced to put their reputations on the line on an ann

A Thanksgiving Day rumination ...... ref :- "The Uncertain Future of Bitcoin Futures" , B

It's probably a generational thing ..... in fact, it's definitely a generational thing. For those still struggling to get their head fully around the principle of cryptocurrencies, investment (if you could call it that) in that area is obviously a no-no. "More fool you !" cry the enthusiasts, pointing to the stratospheric returns that they may or may not have already realised. But even for a good number of those who understand how it all works, the rocketing price of cryptocurrencies smacks of a huge bubble waiting to burst and for them, jumping on the Bitcoin bandwagon for example would not be an investment but a highly speculative punt fraught with excessive risk. Of course, they would hav

Look long, not short ..... a change in a basic tenet of trading Foreign Exchange ref :- "Forge

Compared to understanding some areas of financial markets, the principle that interest rate differentials should drive movements in currency valuations is a simple one. The more interest one can earn in a particular currency, the more money is attracted to it. Usually, and certainly for almost the last 25 years, it was short-term rates that FX traders paid most attention to -- and that means anything up to the 2yr bond yield. It's been a totally logical way of approaching things, and for two main reasons . The first is "Money Flows" : Higher interest rates attract speculative cash chasing the "carry". Remember that fella ? Essentially, it's the extra interest available in one currency over

Struggling to find something new about Wall Street's record-breaking rise ? Some factors we know

An article from yesterday, but well worth going back to if you missed it ..... The reasons behind the spectacular bull run are manifold and occasionally complex ...... unless you're Donald Trump that is, in which case there's a much simpler answer : HE himself is the driving factor behind it all. We can marvel at the president's levels of self-regard which compels him to seek praise without any apparent embarrassment even when it's not entirely appropriate, but undeniably his stated policy aims are business- and equity-friendly. Of course, the Trump administration is having a very hard time trying to get anything done (what happened to infrastructure spending ?), so we can assume that the m

Time for a rumination on the Dollar ...... ref :-  SHORT VIEW , by Roger Blitz in the Financial Tim

It's not a bad moment to take stock of what's gone and what might be in store, poised as we are between the anniversary of Donald Trump's election victory and that end-of-year period when traders will have to offer their predictions for 2018. As a sweeping generalisation, equity market forecasters will remember 2017 a lot more fondly than their currency market equivalents, given how many of the latter were calling for a rampant Dollar. Of course, they would argue that any trader worth his salt should be able to recognise changing dynamics in double-quick time and adapt his or her trading strategies accordingly ..... that's true, but the early part of the year must have been a bit painful for

Honestly, this is not just an academic exercise ..... it really could spell trouble ref : - "T

No apologies for returning to the US yield curve once again -- well, maybe just a small one -- but the subject is garnering ever more airtime and column inches in the financial media. A host of experts are keen to remind us that flattening yield curves have a pretty good record when it comes to signalling economic slowdowns, and inverted yield curves (short term yields actually higher than long term yields) have an even better one in predicting recessions. On the face of it and looking at the data, neither of those two developments seem obviously likely in the near future -- which is precisely why the wise investor should be keeping a close eye on the curve. A flattening yield curve da

"Bubble  =   a rally that I missed"  --   Burnett Tabrum, Portfolio Manager. ref :- &quot

Mr Tabrum's pithy message may be over two years old, but it retains all its self-mocking wisdom and has seldom been more appropriate. If it smacks a little of bitter self-recrimination at missed opportunities, well ..... we can surely forgive him that. Who amongst us hasn't been there ? The degree may depend on the nature of the portfolio you're managing, but caution in investment decisions is never a BAD thing. More than that, in terms of weighing up risk/reward ratios we would argue that it's essential. It's just that one's got take care that caution doesn't become all-consuming and hamstrings the decision-making process. Those who naturally distrust markets that have already made huge gai

It's November 8th ...... ring any bells ? ref :- "A year in : U.S. stock market under Trum

Of course we knew that US presidential elections take place every four years, but we had to look up how the actual date of the election is chosen -- it's the first Tuesday after November 1st, apparently. So it was that on Nov 8th last year, Donald John Trump was elected as 45th president of the United States. Time will tell just how just how much importance will be attached to that date when they come to write the history books of this period, but already it seems like an awfully big deal -- as everyone must have suspected it would after the election of a populist outsider with his own way of doing things, and with little regard to the conventions normally associated with his position. Q

They can't get enough of the Fed Chair story, and even managed to throw in a nice little conspir

Was it really only Thursday that President Trump stopped teasing the markets and officially revealed that Jerome "Jay" Powell is to be the next Chairman of the Federal Reserve ? Given the miles of column inches in the financial media devoted to the subject, both before and after the event, it seems like the whole thing's been going on a lot longer than that. Well, it has of course ..... the extent of the fevered speculation reflects the fact that being boss of the Fed makes you the most important central banker in the world and the decisions that you oversee affect each and every one of us, not just those involved in markets, and on a global scale. All things considered, it's not surprising

It all depends on how you look at it ..... andif you look at it this way, inflation's already up

There are any number of measures of inflation ..... most obviously the Consumer Price Index (CPI) and its close relative the Core Consumer Price Index, which removes those highly volatile elements of food and energy prices and is generally considered to be more accurate, even if headline CPI often grabs ..... well, more of the headlines. The Fed's preferred measure of inflation is the change in the Core Personal Consumption Expenditures Price Index, known as PCE for short (thank God !) . All of these tools show that despite healthy GDP growth, super-low unemployment and historically-speaking still very benign monetary conditions, inflation stubbornly remains around the 1.3 - 1.4% area, well

Ah yes ..... THAT'S how "Buy the Rumour, Sell the Fact" works ref :- General

Just very quickly ..... we were talking only yesterday about that old market proverb "Buy the Rumour, Sell the Fact" , and how the most likely outcome of the Bank of England's rate decision would probably provide us with a good example of the phenomenon. It's obviously nice when things work out as you expect them to, but more importantly for those new to the markets, the reaction of both Sterling and Gilts provided a textbook case in point. The BoE duly obliged with a 1/4 point rate rise at lunchtime today, a move that was very well signposted by its officials and was almost entirely expected. Traders had been buying Sterling for a little while in advance of the hike and had taken GBP / USD

"Painting Yourself into a Corner" revisited ....

"Painting Yourself into a Corner" Revisited .... the Bank of England has nowhere else to go, right ? ref :- "Focus turns to strength of BoE's resolve" , The Financial Times, Markets and Investing Tomorrow the Monetary Policy Committee (MPC) of the Bank of England will deliver its decision on whether to lift rates for the first time in over ten years. After all the heavy signalling from Governor Mark Carney and others in recent weeks, you'd think that a 1/4 point hike was absolutely guaranteed ..... positively nailed on. There remains a scintilla of doubt though ..... partly a result of Mr Carney's unfortunate but probably justified reputation for suggesting courses of action that don't alwa

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