What a difference a weekend can make. One minute we are all amazed at the US’s commitment to eradicate nuclear weapons and undertake a greater international level of cooperation on all fronts, the next we’ve got a new-found nuclear facility in Iran (come on, intelligence services only “just uncovered the “vast” facility?), coupled with some testing of rockets (wait for the vigorous response from a certain nation in the Levant since it’s a “long-range” Iranian missile), India begins to rattle its own nuclear sabre and the arms-race is on again – short-life for the heralded US attempt. Germany’s Merkel is victorious in her coalition being re-elected even with resounding disapproval to the GM/Opel deal, and with a lack of financial data to shape the markets, the G20’s regulation promises serve the final nail-in-the-coffin of hopeful market investors – last week’s ominous moves across global markets (most majors -2% for the week), not to mention sudden surge in US$ demand (Cable at 1.59) a sign that risk is being taken off the table, again. At least Berlusconi has something to smile about; apparently the outfits on Milan’s fashion-week-catwalks are some of the skimpiest flesh-baring in recent memory, inspired by the Italian prime minister’s very own summer expeditions.
So what are investors doing now that their fun with liquidity fuelled markets has seemingly suspended itself for a while? They’re watching TV apparently (definitely in the US and UK) – viewer figures for the first two weeks of the Autumn programme schedule are through the roof, and with almost 45 new television series’ to choose from, it’s not much of a surprise – in fact, entire schedules have been re-jigged to make way for extra episodes of escapist edgy-dramas and mood-enhancing light hearted comedy-shows (still no match for the genre-creating Seinfeld I’m afraid), but what seems to have fully captured viewers’ imaginations (if you believe published audience figures) are shows based on the strangely appealing (to teenage girls especially) beyond-the-fringes-of-conformity-and-romantically-tinged Vampires. One show in particular, True Blood, has just completed a record-breaking season to make way for another blood (and advertising money) sucking extravaganza. Just as superheroes dominated movie-screens for years post 9/11, the desire to forget the mundane in a fantasy world of weekly-high-end-production and scripting an overpowering force in economy-troubled Western households. As fans-of-the-undead are viewing in force, the fangs come out to puncture recently-inflated market returns.
Sentiment appears to have totally shifted if you are to believe a couple of the conversations held recently with major Middle Eastern institutional fund managers, sensing markets are turning – for the worse. Without wanting to sound overly pessimistic, human emotion has begun its painful siege against the fortress of optimism that stood strong for several months. However, with the supply of enthusiasm and morale now ebbing in the face of the mounting force below those attempting to defend the bastions of a fundamentally weak economy, we are worryingly close to witnessing the fall of their defences and what many anxiously predict will be another ransacking of the equity markets beyond – possibly not with the same violence as in recent history (some do learn from experience), but with ulcer-bursting consequences none-the-less. Gold’s fall back below $1,000/oz as well as Oil’s retreat all the way to $65/brl a tandem play with the unwinding of the dollar hedge, but the speed at which it all took place (-7% in three days last week) the more interesting fact to note.
The wonderful rally and surge of optimism experienced throughout the summer months and carried on – to everyone’s surprise – through September has now begun its deceleration, at super-car-neck-braking speed.
Leading indicators are simply not living up to expectation, with a very visibly weak shipping market (the BDIY has once again lost 50% of its value since August, and ships are simply not transporting), lacklustre production numbers and sluggish labour markets with no clear light at the end-of-the-tunnel. We’ve had markets ignore much of this for as long as possible, and a sustained rally after the initial push caught many by surprise and hence the usual “I-want-in” situation took hold. So, given all the subconscious images of Vampires western fund managers supposedly have running through their late-night-TV-watching dreams, are we in for another frenzied blood-letting or just a quick fang-fuelled-fix right through the neck of some poor unsuspecting investors/victims?
No comments:
Post a Comment