Real Reason Behind Qatar Crisis Is Natural Gas, as Saudis Issue 24 Hour Ultimatum

Gulf CrisisIn the latest escalation of the Gulf crisis in which a coalition of Saudi-led states cut off diplomatic and economic ties with Qatar, Saudi Arabia has now given Qatar a 24 hour ultimatum to fulfil 10 conditions, that have been conveyed to Kuwait, which is currently involved in the role of a mediator between Saudi and Qatar.

Whilst the official narrative for the diplomatic fallout is because – to everyone’s ‘stunned amazement’ – Qatar was funding terrorists, including a report by the FT that Qatar has directly provided $1 billion in funding to Iran and al-Qaeda spinoffs, could the real reason behind the diplomatic fallout be far simpler, and once again has to do with a long-running and controversial topic, namely Qatar’s regional natural gas dominance. Learn more

Volatility: Deep Calm in the Markets

“Not since Watergate have our legal systems been so threatened, and our faith in the independence and integrity of those systems so shaken,” These were the words of Senator Richard Blumenthal of the US Judiciary on the incendiary news that President Trump has fired the Director of the FBI, James Comey. The timing of the termination, occurring whilst the presidential campaign is under investigation for possible ties to Russian collusion has raised eyebrows…

Yet those searching for some immediate negative market reaction to events reminiscent of the Nixon debacle would be hard pushed to find much of any real significance: A small slide on equity futures and a brief flight to currency safe havens (a fleeting rally on USD/JPY to a 114.32 high which swiftly retraced to a 113.63 low) were about all- Indeed the S&P500 index even ticked upwards, closing at a record high of 2399.63 on the day. What is more, the US equity markets have remained largely flat since February, whilst volatility on treasuries also remains low. What effect this latest twist will have on Trump’s longer term economic plan of tax reforms, protectionism, healthcare and infrastructure investment remains to be seen. Some indicators that it is stalling were already in place after a tumultuous first one hundred days, and it is hard to see these latest developments helping matters.

James Jones (CFA) of Momentum Global Investment Management, one of our UK regulated, discretionary fund managers, shares his view. Click here to view.

PortfolioMetrix Market Update and Portfolio Performance Review April 2017

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Politics again dominated in April with the big news for European investors being the relief that centralist Emmanuel Macron progressed to the second round of the French presidential election and has then went on to secure election ahead of Le Pen. Elsewhere, there was an announcement of a snap election in the UK and investors mulled over Trump’s first 100 days in office against the backdrop of weaker than expected US growth. Learn more

China’s Improving Economic Outlook

The risks of a hard landing in China have subsided as the strong economic data releases of January continue to support the country’s improving economic outlook. Exports, measured inchina US dollars jumped 16.7% year on year, from 3.1% in December and beat market calls for 10%, meanwhile imports remained robust at 7.9%, beating the market consensus once again. Inflation figures also surprised on the upside; PPI surged 6.9% to the highest level since March 2011 while CPI rose 2.5%, from 2.1% in December. ‘Seasonal factors’ could have contributed to the encouraging trade data; boosted by the timing of the week-long Lunar New Year beginning in January.

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Investor Confidence Is High – Why Are We Surprised?

ftse100-14-feb-2017Survey data out of both the US and UK in recent months has confounded perceived wisdom
because despite significant political upheaval in these countries last year, confidence has improved.

This is something of a surprise because such substantial changes may be considered a destabilisation risk given the relative fragility of confidence following the global financial crisis.  Indeed, only twelve months ago the market would seemingly fall regardless of news flow as a combination of weak resource prices, concerns over China and now long forgotten whispers about the end of the credit cycle provided a negative background that was difficult to overlook.

To paraphrase Charles Mackay, author of Extraordinary Popular Delusions and the Madness of Crowds (first published in 1841) market participants were gripped by fear and in that condition investors saw risk even in enticing opportunities.

James Klempster (CFA), Head of Portfolio Management for Momentum Global Investment Management shares his view. Click here to view.