Friday, January 9, 2015

markets today. 09.01.15

Main news items for today being that Greek debt is set to rise in the wake of the expected election in late Jan. If oil breaches $40 per barrel than all bets are off. Also important to see the last oil crash in 07-08 where oil dipped a $100 in 6months and then recovered over the next 2years back to 70% of boom levels.

Yesterday was a broad and strong rally throughout the markets we have retooled our portfolio to become coupon-heavy however we have taken very strong African risk (adding to our position) and at the same time taking advantage of the turnaround ongoing at Tescos (shares rallied 15%). Non-farm payrolls set to emerge today would provide the tone to the US recovery while the EU is currently weighing active stimulus programs in the form of bond purchase.

Other news is the precipitous decline in EURUSD it may even reach parity. EURO against other assets has really held up but the eventuality is that with the Eurozone considering quantitative easing & the US talking about the tenor of the recovery, divergence is expected. Finally of interest is Santander's big announcement about slashing dividends, which is the right way to conserve cash even though it disclaimed any interest in Banca Montei Paschi (consolidation in Euro-financial sector ongoing).


Are we going to see a similar type of pattern where the long-term structural trend is cheap energy (despite the plethora of oil suppliers, Saudi Arabia is home to 80% of proven oil reserves and as Oil Minister Naimi mentioned is more interested in keeping a sustainable market while weeding out unsustainable producers, conveniently those like Russo-Iran etc, goodbye Scottish independence?)

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