Rainer's Investment Insights

We are in a "corrective market", so goes the headline. Since last Monday, the S&P 500 fell from 2103 to 1971. That is a 6.3% drop in the space of 5 trading days, the largest since - October 2014.  Indeed, the impulsiveness of the correction mirrors events of last October.  Of course, the media argues 24/7 as to when the correction started and why. Was it the devaluation of the Yuan? Events in Greece? The commodity slump? A nightmare vision of Trump as President of the USA? In reality, once the selling starts, many punters ignore individual signals of their local markets, economic divergence or individual risk considerations.  They just get out. But just what do you do, if you are still invested? And if you are out, when do you get back in?  The Greece debt crisis is not over yet: the country is going to the polls - and might end up totally rejecting the tough measures of the recent accord. That would then become a trigger for much greater volatility,and ...

Europe is not just a union of states. Within it, there is the EU Zone, consisting of those countries who use the common currency, the EUR. Then there is the second tier, countries that aspire to join the EU Zone and enjoy its benefits. But there is third group, which so far consider it more advantageous to stay away from the EU Zone. Often commentators do not distinguish when they comment on "Europe". While the main comments in this report focus on the EU Zone, I want to comment on other European countries, too. PART ONE -  GREECE   The Hottest Topic  Despite its "minimal" economic relevance, Greece is today's hottest topic. Historically, she is the cradle of European culture, philosophy, the birthplace of democracy, and medical knowledge. But today's Europeans often describe Greeks as lazy, disorganised, living a dolce vitae without a care for the world. I don't know many Greeks and I loathe judgemental stereotypes, so I can't really argu...

How did it start? 2014 and 2015 have seen huge swings in currency markets and many wonder why the sudden increase in volatility? You probably know the factors that are driving currency markets potty:  The GFC of 2008 was to be cured by quantitative easing (QE), massive injections of liquidity to support world economies. They survived but currencies are in turmoil.   Please note: all charts are made with Chartnexus data and software. USD devalues 30% during QE1 & QE2 During the QE program of the US, the USD purchasing power declined roughly 30% against major world currencies. Thus, the US export industry enjoyed a considerable price advantage, which contributed to the overall economic recovery and the US stock markets.  USD during QE3 etc. to end of QE During the QE measures that followed, the USD stayed low. Only once the FED started TAPERING, i.e reduce the amount of bond purchases in February 2013 and eventually stop purchases altogether in October ...