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.

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US dollar on the back foot

dollarsAs Trump voiced his concerns over the apparent ‘bunch of bad hombres down’ in Mexico, the less sensational Fed voted unanimously to keep rates on hold and gave little indication of a hike at the next meeting in March. Comments included ‘some further strengthening’ in the labour market, increasing inflation, albeit still below the central bank’s target, and ‘soft’ business sentiment.

One thing you cannot say about Trump is, unlike many politicians globally, he has followed through with some of his main campaign promises, albeit some more recent actions are deemed controversial by many. We suspect the broadly dovish Fed members will act on a wait-and-see basis, as there has been little to no guidance from the Trump administration with respect to fiscal policy deployment and the consequent effects on US growth. The futures market is pricing in over a 70% chance of a hike in June.

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Weekly Market Update

News this past week:

  • China’s economy grows at an annualised rate of 6.7% in Q3
  • European bank shares rise following uneventful ECB meeting
  • UK CPI jumps month-on-month
  • US dollar strengthens as company earnings season commences
  • Portugal’s sovereign bond rating avoids decisive downgrade

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Weekly Market Update

News this past week:

  • Dollar strengthens as market prepares for Fed rate hike
  • Inflation expectations rise in the UK
  • Bond yields rise amid tapering rumours
  • Chinese trade data disappoints, whilst inflation rises
  • Eurozone industrial production beats expectations

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Weekly Market Update

• Sterling vs USD lowest since 1985, whilst UK equities reach record highs
• US economy adds 156,000 jobs in September
• Dollar rises as expectations converge on December rate hike
• ECB rumours trigger rise in global bond yields
• In commodities, oil rises and gold falls

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How To Trade Jackson Hole: These 3 Currencies Will Move Most To Yellen’s Statement

Yellen Testifies At Joint Economic Committee Hearing On Economic OutlookShould Federal Reserve chair Janet Yellen deliver a surprise in her keenly-awaited Jackson Hole speech tomorrow Friday, one of the first places investors will react will likely be the currency market.

Ahead of the speech, Goldman’s FX strategist Robin Brooks has prepared an analysis looking at which 3 currencies one should trade to get the highest bang for the volatility buck on Friday, or as he puts it: “Which Dollar Cross Responds most to Fed Surprises? ”

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Momentum Global Investments: Worries over China, outlook for US dollar, impacts on the markets

Glyn Owen, Investment Director of Momentum Global Investment Management provides a brief overview of markets and discusses

  • Worries over China
  • Outlook for US dollar
  • Impacts on the markets
    • Is the world facing recessionary conditions?
    • Are problems in the financial system systematic?

Please click here or on the image below to view the video.