Was the Santa Rally going to happen or not this Christmas? Would there be any festive cheer for those who trade this strategy in 2015? For a period of time it looked like it wouldn’t, especially when Janet Yellen announced the US interest rate rise from 0.25% to 0.5% earlier in December. It looked like that one move had torpedoed any chance of it happening. Then mid-month the Santa Rally trade 2015 finally arrived! [Read more…]
So was the US Rate rise a non-event or globally significant? The recent increase in interest rates by Janet Yellen, the Governor of the Fed, from 0.25% to 0.5% may on the surface appear an insignificant change. But in fact it has far reaching global concequences. This was the first time the US have raised rates since June 2006, therefore ending their policy of low interest. It must be pointed out though that 0.5% is in itself extremely low still, but it does signify a possible shift in thinking by the Fed and we could see rates creep up slowly over time. The magic warning number these days is 4% – where if that does happen I am reliably informed that we should sell everything including the kitchen sink! Janet Yellen sees rates at 3 1/4% by 2018.
The immediate impact on the markets was sort of a non-event. They had been pricing in such a rise since September, so there were no real surprises which kept most things stable and allowed traders to focus on the fundamentals.
Why the increase now?
Emerging Markets – struggling to survive?
The Emerging Markets have been hit hard over the last three months to say the least. More so because of China’s weakening economy, currency devaluation issues, internal reforms and generally stellar poor performance. This is borne out in the Shanghai Composite Index which has shown a near 40% fall! [Read more…]
What we had this week and late last week was a scare. It was a trip to your doctors rather than a trip to A&E! Or, in technical terms, it was a market correction rather than a significant change in the playing fields of the world’s financial markets. The bubble didn’t burst – at least not so far! [Read more…]