Rainer's Investment Insights

“World equities have peaked!” In the terrible aftermath of the Paris bombing, I read some commentators referring to the rally since last Monday as a "Patriots' Rally". I am not sure whether this term really is in use, and I can't quite imagine a Patriots' Rally to go round the world! Could someone really be considering a stock market rally as a viable battle strategy against DAESH / Islamic State? And why does the media still indulge the black flag guys by honouring the name they have given themselves? DAESH denotes who they are.  Be that as it may, since that dreadful Friday, global equity markets have been rallying as has the USD. But a continuation beyond today is hard to visualise when you look at the odds stacked against it. Some three weeks ago, I said the rally is almost dead and that in the coming weeks equity trading would be range-bound at best. My portfolio switched to safety on November 5th, one trading day after the global equity peak. I...

US equities have peaked, … but before I pronounce the rally dead – and hail the start to a significant bearish phase, we ought to check how global equity indices have performed in the last 6 months and see if the price structures point to where the markets are headed next.   Santa Rally still to come? I want to pour a little water on the torches of the “Santa-rally-comes-early” torch bearers. Here is a cockeyed comment I had in my inbox this morning: “Should we worry whether the Santa Rally is on for 2015 or not?” it asks. And then goes on to insist that “the short term considerations don’t matter for the long-term investor and his investment goals.” HELLO, this is “My-Diesel-is-Clean” talk and we know what happened to those talkers next. The above chart tells us that Santa’s returns vary greatly depending on the actual period t (t= year end. t+1 then is 1 day to year end, t+2 means 2 days to year end, etc.), and the number of years. The fact that the period...

September 29th was indeed a major turning point in global financial markets, +/- 1 day.  That was my target date, so predicted in my previous post.  From those low levels, markets moved sharply, some even returning to previous highs.  USD goes soft Having started on September 29, and recording its first peak on October 8th, this well supported equity rally was accompanied by a weakening US dollar (-3% against global currency basket) as more and more investors convinced themselves that the FED would not raise interest rates until next year. It is important to see the US stock performance in this light, too, especially if you normally place your investment in EUR or some Asian currencies like the Singapore Dollar (*SGD), all of which saw their local currencies strengthen.  Curiously, I noted that USD investors quickly switched to Asian equity and - gold funds in the last week of September, thus avoiding the trap of remaining stuck in a weakening dollar environm...

Stock Markets since Friday 18th peak to Thursday (TODAY) morning (US time), 24th September  DJIA        16930  (peak Thursday 17th)  - now 16070 =  loss of  860 pts / -5% NASDAQ  4450 ( peak Thursday 17th) -  now 4242 =  loss of  208 pts / -4.8% RUSSELL 1195  ( peak Thursday 17th)  -  now  1081 =  loss of  114 pts / -9.5% DAX        10509  ( peak Thursday 9th !)  -  now  9412 =  loss of  1097 pts / -10.4% NIKKEI   18770  ( peak Thursday 9th !)  -  now  17570=  loss of  1200 pts / -6.3% ALMOST FORGOT... Gold is rallying sharply, now in its second week! Current price above $1152 the ounce. Since the low at 1055 it has returned 9.3%. Will it continue? Well, it may peak anytime in line with the ending of the faltering stock market. So if you are not in now, you are a bit late... may be wait till e...

Stocks Down Again By right, no change in interest rates should have resulted in a short rally in stocks and shares. Last Friday, US stocks rallied till lunch time, then tumbled some 200 points, - after the FED announced that rates will stay the same at 0.25%.  Was the stock market really reacting to the FED decision? Are punters really that dim to interpret the lack of action as a sign of a secret economic weakness? Well, that is what I hear from the financial whizz guys of the famous networks.  If that were so, then why did the German DAX drop 3%(!) all through Friday, closing long before the official announcement came in the US? The Japanese NIKKEI 225 also fell 2% on Friday, and closed 12 hours earlier.  Most other markets in the Asia-Pacific had a positive day.  Does that mean the Germans and the Japanese were psychic and knew that the US stocks would go down and reacted preemptively, - while the others only "cared" for their own little markets? Or - did th...

The Old Game Mr Bernanke's statement often contained hints, kernels of truth and some points to ponder.  The latter always proved a challenge to the investment community. When he said, he considers an end to quantitative easing, (May 2014)  the market reacted vehemently with a sharp drop, so as to tell him, "don't mess with the stock market".  It worked like a ping pong game:  Mr Bernanke "serves" - the end to QE,  they (=investors) "smash" straight at him,  he "slices" back with a moderated suggestion,  they return hard, and he stretches for a conciliatory "backhand", to re-establish the status quo, i.e. "FED is not going to kill QE just yet"!   They hit the winning spin... and markets rally to new highs... As the game wears on, exhaustion sets in: More sliced backhands at the distress corner ("QE must end") and market participants get used to catching the drift, - and adopt the new style of play...

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 ...