Rainer's Investment Insights

The way the markets performed in the last two weeks is even less remarkable than I thought it would be. Over the last few months, I said not to expect too much from the "Santa Rally" in equities this year.   Now, the arguments fly whether this is the start to a January correction, or whether the weakness of the last two trading days is just the market taking a breather and the next rally is just around the corner.  Using technical analysis, the shorter-term analysts insist that we will see more upside first, basing it on various indicators, while the medium to long term analysis projects more selling pressure ahead.   Since it is NEW YEAR's EVE today, I only have about an hour before 'my shop' closes and the time comes to switch my attention to family matters, visitors and a bucket full of crackers. I also don't want to bore your first few moments in the NEW YEAR with an analytical essay that may need to be rewritten a week later... No Change To Tenta...

FED Rate Hike: A Boon Or A Curse? Probably neither: The last 5 trading days are best described as  aberrations of human behaviour. T he price gyrations in financial markets have been extreme, trading volumes huge, mostly denoting the reactions of ill advised punters.  During the last 8 months, asset prices had been adjusting in anticipation of a rate hike of 0.25%. When it was announced on the December 16th, some punters thought a new rally is starting. After all, it had been 7+ years since the last rate increase and surely, the economy looks strong enough to warrant it. Three days later, a counter sentiment created massive selling pressures, and global market indices returned to square one, most of them.   World Indices S&P500, Dec '15 correction and short term outlook; source: Chartnexus Actually, the turning moment came on Monday,  the 14th, late in the day and - two days  BEFORE the rate increase was announced. To me the subsequen...

Weekly Brief (Nov 30 to Dec 4) Wasn't the week a barrage of conflicting messages and events! Volatility in financial markets picked up steam though hardly in logical consequence to the news. Correlation between assets and markets became close to 100% in US and Europe: as stock prices rose, yields rose, too, as did gold and silver prices, at least the last 2 days of the week. In Asia, however, markets moved in range, almost unperturbed by the hectic in developed world. Equities in US & EU The week started off with US and EU  equities  drifting gently lower, then a boisterous upswing on Tuesday, December 1st, yet erasing it on Wednesday. Thursday brought more downside and traders braced themselves for a negative weekly return. But on Friday, equities rallied strongly, ending the week close to the levels where it began.  Bonds US Bond yields had been falling for almost a month, yet on Thursday, they rose 20 basis points for the 10-year Treasury bill, dropp...

Asian Equities Suffer Despite the obvious technical analysis divergence I spoke of in  my last post , equities in Europe and the US have been rallying again following the harrowing terrorist attacks in Paris. Asian equities did not share the same positive momentum.  There are the obvious reasons, like  a strong USD acts as a magnet for moneys from all over the world. Why invest in a country with an uncertain investment environment when you can have USD safely and - hopefully with a little more interest to boot. USD investors will sell overseas holdings and return to the US in search of investment opportunities. (At some point, the strong dollar will flow into foreign lands again to buy bargain Asian assets. That point is in the distant future!) The currency war is by no means over, and Asian currencies suffer tremendous volatility.  But there are also country specific factors, which add to the conundrum.  Let's look at some of the bigger Asian co...